Abstract
While a major focus of the Solar PV Industry is on upstream developments in cost reductions and cell efficiency gains in manufacturing of solar cells and modules, there is also considerable work to be done downstream to bring solar to the end-user. Although many technical issues in manufacturing have been overcome there remain numerous non-technical challenges downstream which must be addressed in order to deliver solar energy to consumers at a mass commercial scale. While solar is already cost competitive with traditional energy sources in regions that have high utility costs, offer incentives and subsidies, and have prevalent sunlight it has yet to reach significant mainstream market penetration even in these areas. Out of the many challenges downstream which prevent consumers from taking the leap to solar, many opportunities exist here for innovative new business models to join current efforts in solar manufacturing to integrate and install solar systems helping to deliver solar energy to the final customer. The primary research of this thesis highlights the innovative PPA business model which is effectively overcoming some of these non-technical challenges end-users face when seeking to install solar PV systems. By using a solar Power Purchase Agreement (PPA), end-users agree to pay only for the power they consume from solar systems installed at their site, not the investment of the solar equipment or installation costs. The PPA provider firm serves as a financing intermediary arranging the capital investment through third party equity investors. This business model effectively overcomes the initial financial barrier which prevents consumers from using solar electricity. In fulfilling the purpose of this thesis the following research questions were addressed: What is unique about the Solar PV Industry? Why is business model innovation important in the development of the solar industry? Why did the PPA business model innovation emerge and what factors contribute to its success? An overall industrial analysis of the solar PV industry is presented, followed by a case study analysis of two PPA firms (Sun Edison, Sun Run) and one non-PPA firm (Borrego). Building upon the data revealed at the firm specific level, a generic business model schematic is constructed to highlight the differences in the PPA versus non-PPA business models.