Iowa Industrial Energy GroupDisruptive Technologies

April 10, 2018

What Solar Installers Normally Talk About

What is a “Disruptive Technology?”

• Dr. Tony Seba of Stanford U gets most of the credit for my perspective on DT.• A DT changes the way we do things forever.• Examples:

• While we use “horsepower” for transportation, we no longer ride horses.• Our businesses have land-line phones but cellular communications rule the day.• Anybody use a typewriter for anything recently?• Anyone take pictures with film anymore?

• In 2000 Kodak had record revenues, profits, every picture used film, paper, developer, etc. good or bad.

• In 2013 Kodak filed bankruptcy, liquidated, at the hands of digital technology.

• These are examples of disruptive technologies.

How to DT Affect Us?

• Things get cheaper, faster and better.• Computers• Smartphones• Consumer Electronics• Internet/Cloud Computing

• How we get information has changed.• Facebook, Twitter, Yahoo and Google.

• I read my news online, not in print.

What DT Am I Talking Today?• In energy and transportation there are 5 DT. Eagle Point Solar is on the forefront of two

of them.• Transportation has at least 3 of them:

• Ride sharing services such as UBER are TECH companies, not transportation companies.• Self driving cars• Electric vehicles (“EVs”)

• Energy has at least 2 of them:• Solar PV for electric generation• Battery storage for holding electrons for future consumption.

Ride Sharing• Our cars sit 96% of the time unused.• Ownership costs roll on regardless. (Insurance, depreciation, parking, loan

payments, etc.)• What if you only paid for the transportation when you need it and use it and

don’t pay when you are not using it?• Uber/Lyft and others use smartphone technology to match passengers in

need of a ride with drivers in need of passengers. • Smartphones know where you are and who you are.

• Ride Sharing has completely disrupted the taxi and limo industries.

Self Driving (Autonomous) Cars• Self driving cars are caused by the convergence of two technologies:

• Supercomputers on wheels.

• In 2000 the first teraflop computer (1 trillion calculations/second) was > $50 million at Sandia labs.

• In 2017 a 2 teraflop computer board is < $500.

• Lidor radar

• Was $70,000/car 3-4 years ago, now < $1,000/car.

• Self driving cars exist because of the convergence of these two disruptive technologies.

• Safety (no comparison, believe it or not!)

Self Driving (Autonomous) Cars

Electric Vehicles (Taking Over?)

Electric Cars

• Tesla and GM now sell 200 mile range electric cars <$40,000. That’s what IC propelled cars cost now.

• Anyone know what a tank of gas equivalent for an electric car is?• $5 bucks (versus $40-50 for gas)

• No more oil changes or tune ups.

• Anyone know how many moving parts there are in an electric car?• < 25 (versus 2,500 for IC propelled cars)

• Your next car will likely be electric.

Electric Cars

Auto Maker’s EV Plans• GM has 200 mile range car (Bolt) <$38,000 and will have 20 EVs by 2023 (Forbes 11/5/17)• Tesla has 3 200 mile range cars (Model S, Model X and Model 3) with Model 3 costing <$36,000• Ford will invest $11 billion in EVs by 2022 and will have 40 EV and EV hybrid models by that

year. (Reuters 1/14/18)• Mercedes plans on challenging Tesla as top luxury EV brand. Mercedes EVs will be

manufactured in 6 plants on 3 continents with first models rolling out ion 2019. (Business Insider 1/30/18)

• Porsche to invest 7.4 billion in EVs by 2022 (The Verge 2/8/18)• Volvo – Every NEW car model after 2019 will be electric. Volvo to add 3 EV models for 2019

model year and state they will not be selling ICE vehicles after 2025. (Volvo press release 7/5/17)• Still not convinced?? It’s happening NOW.

Simplified EV Cost vs IC Vehicles

• EVs have approximately 25 moving parts. ICE cars have 2,500.

• Fuel Cost 10% - 20%, electric charging cost vs gasoline.• Unless you have a Tesla and access to a Tesla Supercharger than cost = $0.

• Engine/motor life • ICE = 150,000 miles +/- if properly maintained

• EV = 500,000 with virtually no maintenance.

• EVs will eventually take over the market for ECONOMIC reasons. They cost the same to buy but cost MUCH LESS to operate.

EV Winners and Losers• Winners

• Auto makers replacing ICE fleets with EV fleets

• Car dealers

• Environment (no emissions)

• Utilities (new market for electricity, EVs can be part of microgrid planning and can be used for load balancing.)

• Losers• Fossil fuel interests including pipelines, offshore platforms, anything but cheap/easy on land oil.

• Auto mechanics

• Used car dealers

• Car dealers for service, etc.

My Favorites

• Solar PV for electric generation• Cost had declined more than 300 times since the 1970s

• Since 2000, solar has been on a 20% annual declining cost curve.

• Trend won’t last forever but it will continue for awhile.

• Electric rates for “Conventional Energy” continue to escalate.

• Alliant Energy spent $720 million on Marshalltown “Peaker” to operate 15% of the time.

• Alliant Energy will spend $620 million tearing down Dubuque, Cassville WI, and another coal plant in Cedar Rapids.

Are We At The Solar “Tipping

Point?”

My Favorites (Cont’d)

• Levelized Cost of Energy for solar already < Grid Power.

• Within a few years LCOE will be < Transmission Cost. • Even if electricity were free, it still has to be transported over the grid.

• Biggest negative for Solar is it has to be used when produced or pushed back into the electric grid, UNTIL,,

• Next disruptive technology STORAGE!

My Favorites (Cont’d)• Storage = Batteries• Batteries = Lithium Ion, technologies in computer and cell phone batteries, also electric

cars.• Lithium is not a scarce element.

• Second element on periodic chart behind hydrogen.• Lithium Ion may not be the ultimate winner but it is right now.

• Battery cost is on a 16% cost decline since 2010 and is accelerating.• Battery costs have decreased 79% since 2010 (Bloomberg New Energy Finance 3/28/18).• LI batteries, properly maintained, can be good for 10,000 cycles (30 years).

Solar + Storage• S + S solves the biggest problem, how to store these electrons for later use.• Raw Economic Example – Maquoketa Valley REC.

• Time of use billing; $0.08/kWh during workday doubling to $0.16/kWh after 4 PM when we all get home from work.

• MV does not Net Meter so any surplus generation to their grid gets paid “Avoided Cost” (about 3 cents/kWh)

• Solar does not generate after 4 PM• Combining S + S can make every kWh worth 16 cents!

• Instead of undersizing solar system you would oversize and store the energy.• Major disruption to Utility Business model when you grow your own energy!

Conclusions

• We are on the cusp of many technology driven disruptions.• There will be winners (maybe me!) and losers (possibly utilities and definitely fossil fuel

interests)• Ride sharing, autonomous vehicles and EVs will dramatically reduce the number of cars on

the road.• Fewer cars = lower demand for energy, particularly fossil fuel.• Investments in Peaker Plants, offshore oil, pipelines will be “Stranded Assets”, big problem

for oil companies and utilities.• Solar + Storage will be BIG winners based on technology that exists and economics.

Questions?bshear@eaglepointsolar.com

www.eaglepointsolar.com563-582-4044