Solar critics often complain that the industry can’t survive without subsidies.
Texas will prove them wrong, says Martin Hermann, founder and CEO of solar developer 8minutenergy.
“Solar will be competitive on price and stability” even when you factor out subsidies over the next few years, he predicts. By the end of next year, solar purchase power agreements will be signed under which solar will sell in the mid to low $30 per megawatt hour. This will allow solar to beat a number of gas contracts, he added.
How low is the price? Low, but not unreasonable. Austin Energy signed a $40 per megawatt hour PPA last year. Earlier this month, developers bid as low as $29.90 per megawatt hour on a contract for the Dubai Electricity and Water Authority. While both utilities can arguably be considered outliers, there’s no mistaking the trend line.
You can think of 8minutenergy as the anti-Sun
“We don’t think it’s a good idea to tie ourselves to a certain technology or manufacturer,” he said. “There is no synergy.”
As a result, the company’s intellectual property revolves around developer know-how, i.e. navigating the permit system, working out the logistics, and negotiating with a dizzying array of partners.
It also means being patient and not forcing artificial growth strategies. Right now, 8minutenergy has 5,500 megawatts worth of deals. 4,000 MW were started around 12 to 18 months ago and are still in the planning stages. Approximately 750 MW are under construction and another 750 MW are producing power. Solar projects take time. The company almost exclusively pursues utility-scale projects and large commercial projects for powering data centers and similar facilities. It has no interest in residential solar or rooftop commercial.
Which method works better—vertical integration or a horizontal business model—will be interesting to watch.
In the end, the growth in the solar industry might just render the debate mute with both sides winning.