I recently had the opportunity to speak at a virtual conference on the built environment called, Shadow Summit. It was an interesting event that focused on the convergence of entrepreneurism, digital technologies, and buildings, homes, and infrastructure.
(if you are visiting this page directly from attending the summit, you can scroll to the bottom to get more information.)
My presentation was titled, “The Coming Age of Self-Powered Buildings.” I have captured a few of the key ideas below.
The price decline of solar energy has no precedent in energy history
The price of hydrocarbons like oil, gas, and coal vary over the decades, often driven by geopolitics more than technology or availability. Only solar, wind, and batteries have seen continuous declines across orders of magnitudes. Solar has seen the largest declines–more than 400-times–over the last forty years.
The secret of solar’s price decline is also what makes it different than any other kind of power plant: solar is a technology, not a fuel. Only batteries have similar characteristics and, in fact, their costs are declining in similarly rapid ways. Notably, wind energy has seen (and will continue to see) large declines but like all large, complex power plants, it will hit diminishing returns as turbines get larger.
Solar’s price declines are transforming the motivations to purchase it
The earliest supporters of solar were environmentally minded people who saw it as a way to reduce the pollution and greenhouse gases from fossil fuels. As the cost of solar went down, it became affordable for grid-scale and residential rooftop with some modest tax incentives from federal and state governments.
The industry is now approaching the point where subsidies and incentives are no longer necessary to make solar the most cost-competitive option for generating electricity (the value of solar compared to the grid varies with state and local incentives, regulations, etc).
Solar has hit a tipping point for one of its largest markets
If someone tells you that solar is too expensive, there’s a good chance their cost data is out of date. This chart above is one of my all-time favorites. The decline in solar costs is not in a vacuum. As panels, electronics, racking, and installations continue, solar doesn’t just become cheap… it becomes cheaper than buying electricity from the grid for office buildings, retailers, grocery stores, campuses, neighborhoods, and just about any mid-sized commercial or municipal property. (Note that the costs on this chart are US-wide averages and local solar and grid costs will vary a lot.)
In 2018, one could be forgiven for saying solar might not be worth the trouble–even if it isn’t a lot more money than grid-based electricity. However, by 2025 and beyond, few businesses will ignore the opportunity to dramatically reduce their energy bills. The ongoing price decline is shifting solar from “nice to have” to “I will get fired if I overpay for my energy bills.” It is hard to overstate how important this transition in motivations will be.
Commercial solar is not just cheaper, it is better
The benefits of local energy go beyond cost savings and even beyond reducing the environmental impact of fossil fuel power plants.
- Local solar is more resilient. 90% of all grid outages are due to failures in powerlines–the transmission and distribution wires that crisscross our towns. When coupled with local batteries, solar allows buildings (and homes) to continue operating even with the grid is offline.
- Local solar creates local jobs. Many of the people who install and manage the local solar live and work in your community. Their taxes go to the same schools and parks and fire departments that serve you and your family.
- Local solar is much cleaner. Many businesses are investing heavily to become sustainable, circular, and to reduce their impact on the world. Local solar not only guarantees a zero-pollution impact for every kilowatt hour generated, but it will also save money along the way.
Building Integrated Photovoltaics (BIPV)
If you think solar energy can only be embodied in black rectangular panels, you should think again. As I learned from my podcast with BIPV pioneer, Laura Sartore, CEO of Ecoprogetti, a new generation of solar is emerging that hides within the aesthetics of even the highest levels of architecture and design. Below are some of the examples of BIPV and what is becoming possible.
Watch the whole presentation
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Related insights from Freeing Energy
- Will waste from retiring solar panels overrun our future landfills? (here)
- Solar and wind use 250-times less water than coal and nuclear plants (here)
- Comparing the concrete and metals used to make power plants like solar farms (here)
Bill’s presentation
Click here to download the entire presentation.
And you can follow along from the audio transcript below:
I’m glad to be here today and glad to have a chance to share some of the work that I’ve been doing and with others. My goal today is to get you excited about what’s going on in the world of self-powered buildings, which I may try to convince you is going to happen bigger, faster, and more economically than a lot of folks think.
Before I jump into what we’re finding in our research, I wanted to give you a little bit about the background on Freeing Energy and a teeny bit about me. I started Freeing Energy after a 20-plus year role in running tech companies as a CEO, was having some nice IPOs and some acquisitions and I worked for IBM for a year after they acquired my company. Then I got excited about clean energy, at first because it was completely undigital and I knew it needed to be revolutionized, but as I got into it, I realized, and I’ll talk a bit about today, that solar is hitting a tipping point where it’s becoming the least expensive way to generate electricity, and the economics are going to be what pushes solar forward rather than necessarily just the need to clean up the energy system and reduce our carbon footprint, et cetera, and so I believe that not only will clean energy improve the lives of billions of people, because a lot of people still have no electricity in parts of the world, but it will create the single largest business opportunity in history.
For an entrepreneur like me, the most interesting and exciting part isn’t high finance and buying half a billion dollars worth of solar panels in the desert, but it’s instead the opportunities that live in the entrepreneurial zone, which is exactly why local energy’s become my focus. What I mean by “local energy” is rooftop solar, solar plus battery, electric vehicles, buildings, neighborhoods, stores, factories, campuses, communities, anything that isn’t the utility that people can build and own on their own as companies or individuals. I do a regular podcast, I’ve done a Ted Talk, so it’s an area I’m trying to get the word out there as broadly as possible and this is another opportunity, which I really appreciate you guys having me be part of this.
Okay, let’s see. This is a small fact that people really get jazzed about. In the last 40 years, the cost of solar has dropped 400 times. 400 times. People who are used to the economics of oil and gas and coal and nuclear, this is a staggering fact, and the reason is simple: It’s solar is a technology, it’s not a fuel. That is so fundamental to the transition in the way we’re generating energy in the world today that people who are currently among the largest and most powerful corporations and government entities in the world who have built that power on top of traditional fossil fuel and digging the energy out of the ground methods, they really struggle to get their head around this, and that’s the opportunity further for entrepreneurs and innovators.
Just like when personal computers came out and the Steve Jobs and Bill Gates were building these crazy little boxes in their garages, the mainframe world, the IBMs, and the other giant corporations couldn’t fathom that these garage projects could be threats, risks, could change anything about what’s going on. In fact, the PCs went on to change the world and are now actually even the largest computing clusters were actually just a bunch of small PCs and the age of mainframes is definitely waning.
As solar drops in price, it goes through different phases and most people miss this. 10 years ago, if you were talking about solar, you were almost certainly talking about environmentalism. You wanted to reduce the carbon footprint, reduce the pollution from coal and other things, but it dropped low enough a few years ago that with some not-too-aggressive government subsidies, it became cheaper to build out solar, so we just needed the utility-scale, a massive build-out of solar. Still far slower than I wish and most people think we should do. There’s a lot of resistance from the incumbents to proceeding as quickly as we might, but it has gotten cheaper with some subsidies and that age is ending. We no longer need solar to be subsidized in most situations for it to be the least expensive.
If you gave me a couple hours today, I would talk about where ultimately that leads us to where we have complete energy abundance, which is nearly very difficult for people to get their heads around, but the opportunity for having near-endless amounts of energy, not free necessarily, but far less expensive than we see today, and it creates entirely new industries and new opportunities, it’s very exciting.
But for the next phase, and the part that I want to talk about today is solar is about to hit, or it’s on its way to hitting maybe the most important milestone in its history. For these large utility-scale solar projects where you go out into the field and down the highway and you see these things off in the distance, these are the least expensive way to make solar, and so they were the first ones that got built out, so the United States today has about 70 or 80 gigawatts of solar panels across the country, and that’s a relatively small portion, that’s well under 10% of the energy generated in the United States, but it’s growing quickly and that’s great.
But historically, the commercial side of the world, the building owners, the campuses and the office buildings and the schools and strip malls, they actually pay less for electricity than people who live in homes and solar was not inexpensive enough to attract their attention, so you go back even just a few years ago, eight years ago, and the cost of buying electricity from the grid, if you’re a business, it goes up and down, depends where you live, as you guys probably know, but it’s on average across the United States, about 10.70 cents, and it’s been roughly that number for the last 10 years. It’ll probably be that number, all forecasts keep it fairly consistent about 10 and 11 cents for the next 20, 30 years.
Now, the story gets interesting because in 2018, that price dropped to just about equal. “Price parity,” they call it, “grid parity,” and what’s happened is we’ve seen a ginormous movement towards commercial solar, and what you wouldn’t have seen two or three years ago is now starting to happen where buildings are increasingly putting solar on the roof to power themselves.
It’s not surprising, right? But the part that people struggle when they forecast this out is, “What happens when it gets way cheaper?” Today, if I knock on your door, I don’t sell solar, but if I did, I would knock on your door and say, “Hey, why don’t we put solar on top of your strip mall or on your big-box retailer?” and they’d say, “You know what? It’s kind of expensive. It’s a little bit of trouble. We’re not good at it. Maybe it’s not going to cost us much more, but we’re not worried about it,” but as we go out a couple of years out, solar starts to get a lot cheaper, and you go out another 10 years and it’s one-third of the price of what these large companies are paying for grid-scale electricity today.
This is a game-changer. All of a sudden, it’s not a “Nice to have and it won’t cost me a ton of money,” but it turns into “Holy cow, I’d be a fool not to embrace this,” and this economic tipping point is what drives so many technologies, from computing to telephony and mobile telephony, there’s a tipping point where it gets inexpensive enough and it absolutely takes off, and we are certainly going to see that with commercial-scale solar.
One of the things that is most exciting about this for me and for folks that are looking out a few years to think about is what happens. Well, one of the most obvious outcomes is we’re going to see an absolute gold rush for companies to start powering their own buildings. Now, IKEA is a great example. They leaned into this before it was economically popular, before people realized that you could save money. I don’t actually know whether IKEA’s early entrance into this space saved them a lot of money or not, but they are definitely setting a pace for tons and tons of other companies to follow.
When you start to power your building with solar panels on your roof, or over your parking lot, or both, or in a field nearby, or from a community solar project maybe a mile or two down the road, not only are you changing the economics of buying electricity from the grid, but you’re getting some secondary benefits, or primary benefits, depending on your goals that people don’t think as much about.
90% of all the outages that occur, if you’ve been following the news, they’re occurring more and more these days, 90% of the grid outages we’re seeing are taking place because of failures in the power lines, what’s the called the “distribution and transmission system” across the United States. Whether it’s squirrels or lightning or snow or fire, by the way, squirrels take out a massive number of these, believe it or not, and they don’t usually survive to tell it, but squirrels are a very large problem for the utility industry.
Anyhow, when you generate your own electricity and you add batteries to it and the grid goes down, you don’t necessarily feel that outage. If you’re a retailer, like for example, a grocery store, and you’ve got a lot of refrigerated food, you have an outage for 12, 18 hours, and your inventory is gone and you’re of no use to the community and your business is going to take a hit. You put a system that self-generates, sometimes a backup system, but those only last for, typically they’re set up to last for half a day or so, but a solar battery system, you can power yourself for weeks, which is what a lot of people have to face during some of these large hurricanes, and your grocery store can continue to operate, you could continue to sell food to the people in the community.
In fact, there’s stories of hurricanes in the past where these self-powered grocery stores became the hub for all of the first responders to reach out to the community, so this resiliency is very important to certain businesses and healthcare, emergency responding, community municipality organizations, the list goes on and on where being resilient to against grid outages is worth more than just the benefit of generating clean energy.
When you do build those giant power plants, the solar power plants or wind power plants you might see off in the distance, a lot of the people coming in to build that are from outside the community, they’re experts that would drive in or fly in from around the country or the world to oversee that development. These local energy projects, a good number of them are actually developed and installed by people in your community. When those people cash that paycheck and pay their taxes, they’re helping pay for the school that your children go to, they’re paying for the park that you go walking in and jogging in. They’re part of your community. The money that you’re spending doesn’t go as easily and quickly to a giant corporation, but a lot of it goes into back into your own community, and that has all kinds of benefits, including social justice and equity.
By the way, it’s clean. If you’re a company like IKEA and you actually want to clean up the energy system and decarbonize the world as quickly as possible, there is no faster way and no more distributed ownership and equal way to do it than to just put solar on your roof and couple it with batteries and the great news is I showed you that graph earlier, that it’s actually becoming less and less expensive to the point where now it’s become the least expensive way in many places around the world to generate electricity.
All right, but I know a lot of the people who are listening in today, they’re thinking about buildings not just as a shell that people live and work in, but it’s something that’s a form of art, and I’ve met very few people who build buildings that don’t consider it as much of an art form as an engineering project, and I think that’s what make architecture and design so exciting because it is, in fact, all those things together, and when you start to talk about solar and you look at the rooftop of that IKEA building I showed you, you start to, “Hmm, maybe it’s not…” It comes with some compromises and maybe on that rooftop, no one’s going to see it, but there’s a lot of other situations in other buildings where it is a problem. I live in a neighborhood where I’m not allowed to put solar in a place at my house where it can be seen in the street because of the homeowners’ association, and certainly, the equivalent exists in businesses.
The good news is that there something called “building-integrated photovoltaics,” which is something that the Freeing Energy Project is very excited about, and I’ve traveled the world to understand and see what people are doing. One of the best examples of building-integrated photovoltaics actually is right here in Georgia just down the road inside the Georgia Tech campus called the “Kendeda Building,” which is one of the most newest and most innovative net-zero buildings in the country, and in this case, the entirety of the building is powered by solar. They don’t actually have enough batteries to power it entirely, but they send extra power back to the grid and get it back at night, so it’s a great first step. What you can see from this picture, it’s a beautiful, beautiful building, but those are traditional solar panels, so just like the IKEA top, but they’re using the solar panels in a creative way that beautifies them and embraces them into the architecture.
I think that I actually forgot to put another picture up here. Down in Florida near Disney World and Universal Studios, a McDonald’s has opened up and has a similar architecture with overarching shaded areas thanks to the solar panels, but it’s exciting because it’s McDonald’s and we can hope they do this across the country in the world, but McDonald’s is creating a net-zero restaurant in a similar architecture that’s using traditional panels, but in a really beautiful way.
But sometimes you can change those panels a little bit and this is… I went to Italy about an hour outside of Venice to a town called “Padua” and I went there, I was there the very same week that COVID broke out, so when I got home, I was concerned, and fortunately, I didn’t get COVID, but this was, if you guys remember, one of the early places that the COVID virus hit Europe was Padua, Italy, and I met a bunch of people there, but fortunately, we didn’t come home with anything and we got tested.
But there’s a company there called “Ecoprogetti,” which is one of the pioneers in creating building-integrated photovoltaics and this is an older building and they’ve been living this for years. In this case, they’re using traditional solar cells, but in a slightly different format, and they’ve created this, I think, rather attractive wall that simultaneously cools the inside of the building, so when you stand in those windows, as I have, and you can see outside in the gorgeous landscape of Padua without too much distraction from the panels from the inside, but it keeps the building much cooler, requires less air conditioning, and those panels, they generate, along with the ones in the roof, all the electricity that manufacturing factory-facility requires.
This a rooftop picture of the same place. Now, I can talk a lot about this, but when you talk about self-powered buildings and you talk about the cost of solar and adding solar on top of it, what makes this so unique is that these are not panels put on top of the building. These panels are actually the roof. I have some closeup pictures, if anybody is super interested in this, feel free to follow-up, but I walked up there among those, and they used a slightly more resilient encapsulation technique, but when you walk inside that building, that factory, and you look up, you can see the outlines of the solar panels, they are the roof, and the rare occasions there’s a leak, they literally just go up with them and replace one of those roof panels, and they’re insulated.
The beauty of this approach is that they didn’t build a roof and then add the panels to it. They built the roof as panels and the combined cost is so much less expensive than putting a normal roof and then putting normal panels on top of it. Even though that’s already cost-competitive with the grid, this is substantially less expensive, and in this particular facility and the five buildings that they own and operate, they generate 100% of their electricity this way, so it’s saved them money and it’s a great example. It’s one of those things where you talk to people and you tell them the numbers.
In fact, I recently was talking to a head of a school and I said, “You can put the solar panels on your roof and you can…” Again, I don’t sell this, I’m just an advocate for the industry, but I was called in as someone who knew them and to give them advice and I said, “You can put these solar panels on your roof. Immediately, your electricity bill will go down, and after 10 years, when they’re paid off, that portion, however many panels you bought, that portion of your electricity bill will go to zero. Day one, you save money. In 10 years, some portion of electricity becomes free,” and he looked at me and said, “I don’t think we’re going to do it,” and I said, “I’m flummoxed. Why would you not embrace this?” He’s, “It sounds too good to be true. We don’t anything about this. It sounds like we’re going to be stuck with something. I’m sure what you’re saying is true, we’re just not here to be a pioneer.”
The reason I get so excited about this, so excited is that this is simply a fact that this is a better, cheaper, cleaner, more resilient solution than what nearly all commercial buildings have today, and it’s not that it needs to get cheaper, it’s not that some big thing has to happen, what we’re talking about is public perception, which is why I’ve dedicated my post-CEO career to getting this word out. I’m working on a book, I do these podcasts, I’m trying to get the word out there to take a much harder look at this. If someone tells you it’s too expensive or it’s too complicated, tell them to take a look again, because they’re probably dealing with two or three-year-old data, and this is a world that’s hitting a tipping point right now.
Here’s something that blows my mind. These are actually solar panels. It is very straightforward to make solar panels that look like anything. They can look like wood, as you see here on the right, they can look like terracotta. I’ve even seen solar panels that actually look like the rounded terracotta that you see and that was actually how Ecoprogetti got their start. I don’t have a picture of it, but they made rounded solar panels that matched the terracotta roofs, the beautiful roofs that cover that part of old Italy. The government there mandates two things, one is that you need to maintain that “heritage look,” they call it, and you need to have solar on your roof, and so there’s been a rapid growth in market of even more sophisticated-looking terracotta-colored panels in that part of Italy, so this is happening now.
If you follow this space at all, you’ve probably noticed that Tesla has announced the third version of their solar glass and this is a shingle replacement, so rather again, like they did in Ecoprogetti, rather than putting in a normal roof and then adding in solar panels, Tesla is pioneering. They’re not the first, but they’re certainly the biggest and most famous and best at marketing. The idea that don’t put up new shingles, if you’re reroofing your house, put up the solar shingles. The result is a system that is the solar shingles plus regular shingle.
I’m sorry, if you were to add new shingles and put third-party standard solar panels on your roof, that’s actually more expensive than the solar shingles by themselves, so if you’re thinking about replacing your roof, jumping into this immediately will not only lower your costs, it will obviously accomplish all kinds of goodness for the environment and for your electricity bills. In nearly all cases I’m aware of, homeowners’ associations have no issues with this whatsoever because it meets their criteria. In other parts of the world where they use different style of roofs, they’re typically even more ahead of the United States in terms of combining the idea of aesthetic solar roofs with the traditional style of roofs that are employed in that part of the world.
There’s even cool stuff coming out like solar windows. There’s actually more examples I could find photographs of and I’ve talked to some companies who make windows and they plan to ship high-quality, effective windows that have the benefit by absorbing some of the light spectrum and using it to power solar, they’re able to reduce the inbound heating issues and generate electricity at the same time and last 30 years, however long the windows in buildings need to last, and they’re doing this all at once.
The bad news of windows in most places is that the sun only hits the windows for part of the time versus the roof, the sun hangs over the roof the entire day, so they tend to generate a less electricity, but again, the cost of adding solar to an already expensive large-scale commercial window is not that much and will ultimately end up paying for itself in the years as it generates electricity. There’s a lot of companies in this space, none yet to the commercial-scale that, say, the Tesla solar glass is, and even that’s still early, but watch this space, it’s happening, and it’s just another way that buildings will become self-powered.
I didn’t put a picture here of solar canopies, but for big-box retailers, schools, anywhere in the suburban part of the world where we drive our car, park in a giant parking lot, lament how much green space is lost as we park all of our cars, those economics are becoming attractive very quickly as well, so the ability to not only generate electricity from your parking lot, but to protect the cars, keep them from getting incredibly hot during the middle of the summer day, and ironically, to actually charge the electric cars that plug in, I think solar canopies on parking lots is going to become another one of those huge growth areas. You don’t have to look far to see statistics that if you just put a solar canopy, not that you realistically could, but if you put a solar canopy on all of the parking lots across the United States, you’d have enough electricity to power the United States, or close to it, so the scale of the opportunity is enormous.
But getting right back just to solar, I’m sorry, just to commercial, the potential for this idea is just incredibly exciting. Today, only 3.5% of buildings that could have solar have it, and this is very, very conservative. This is buildings that can generate meaningful amounts of electricity with roofs. It assumes that only half of the roof is capable of holding solar, where most roofs can 80, 90%. Very, very, very conservative estimates. They’ve counted 600,000 commercial buildings, and these are large buildings, that can put solar on their roof to power themselves. The total capacity of all of these, again, this is theoretical, but it makes a point, if you put solar on all of these commercial buildings, and you’re only covering half of the roof of these buildings, and you’re only going on the roofs of the buildings that are the easiest and just no issues whatsoever, you would generate 145 gigawatts of solar power. How much has that? Well, all the solar electricity generated the United States, all the solar plants installed over the last two decades total 85 gigawatts, so the capacity opportunity on commercial buildings is just stunning and the economics are positive.
I remember it was a book I read a couple of years ago and it asked this great question, it was an interview question they recommended that people ask interviewees and I never forgot it. The question was, “What do you know? What are you sure about that almost no one else sees? What are you confident of that you’d be willing to argue as heavily with someone whose dogmatic approach may not appreciate this thing that you understand?” For me, these numbers I’ve shared with you and the fact that commercial-scale solar are the buildings and architecture are converging to not only be clean, not only to decarbonize the grid, but to add resiliency, to save money. This opportunity is absolutely enormous. This is a tens of billions of dollars in opportunity a year coming up right on us now.
This was the message I wanted to share with you today. I’m obviously passionate about it and I’m hoping that people will take a minute look at it a bit further, a little deeper, and realize that even if maybe September of 2020 isn’t exactly the right time, the reality, the economics, the possibility of the technology, self-generating power buildings is here now, and it has a chance to do more quickly to decarbonize the grid that all the policy, all the politicians we vote for. This has a chance to make a huge difference very quickly, so I hope a few of you get excited about this. If you go to my website http://FreeingEnergy/shadow2020 you can get this slideshow and you can also learn more about what we’re doing in overall local energy and particularly around buildings. That wraps up, so thank you.
