BRIGHT U.S. SUN MARKET

Oerlikon Solar Sees US “Poised” to Become Largest Market in World by 2012
Dr. Chris Constantine, March 16, 2010 (Oerlikon Solar)

"…[The U.S. looks likely to become the] number one solar market in the world by 2012…[T]he fastest growing PV segment will be the distributed generation utility segment (under 20MW) with new utility project models, growing financing support, and growing public policy support to help accelerate growth. Total US demand could reach as high as 4GW in 2012, dramatically up from the 2009 level of less than 700MW.

"Key short term growth drivers include the Investment Tax Credit grants that provide a 30% refund (not tax credit) through 2010, the DOE energy loan guarantee program, expanded utility financing, and accelerated depreciation schedules The clearly optimistic 4GW upside scenario assumes continuation and expansion of state-level incentives, national Renewal Portfolio Standards (RPS) and accelerated investment recovery. In California, which comprises 60% of the U.S. grid-connected solar PV market…drivers include the California Solar Initiative for systems less than 1MW in size, an increase in the RPS to 33%, expanded state FIT programs, and provisions that allow utility ownership and accelerated depreciation for solar…16 [states have RPSs] with explicit targets or “multipliers“for solar and small-scale distributed renewables. Several states are considering additional RPS increases and FIT legislation."

From solar industry expert Paula Mints (click to enlarge)

"Another important factor is that more states are adopting “time of use” electric rates for commercial customers which will result in utilities seeing higher value in procurement of PV electricity during high peak times. Utilities may also enter the commercial PV rooftop business, with new projects by Southern California Edison and others offering a glimpse into future business models. Other key drivers include the growth innovative financing such as PV system leases, PPA agreements for homeowners, and municipal financing (loans repaid through property tax).

"Grid parity will be the mid-term driver of solar demand in the US as the cost of solar energy-generated electricity from residential photovoltaic (PV) panels becomes equivalent with the cost of electricity purchased from the grid in many areas of the country. Constantine showed National Renewable Energy Laboratory (NREL) data that show break-even conditions will exist for 67% of US residential electricity sales in 2015, given reasonable assumptions about the rising cost of fossil fuels, continued investment tax credits, and other factors. Increasingly, as power producers, financial institutions, installers, regulators, and other participants recognize that grid parity is on the horizon, market adoption of solar will rapidly accelerate…"

From solar industry expert Paula Mints (click to enlarge)

"…[T]he fastest growth [will be in the utility] sector, primarily those in states with strong RPS initiatives and high electricity rates. This segment opportunity will increase as solar PPA prices converge with wind and Natural Gas Turbine plants. The continued opposition to new transmission lines may impact Concentrated Solar projects more than PV. In fact, a market “sweet spot” for projects less than 20MW co-located with electric substations (no new transmission lines) are forming that will accelerate utility adoption. Utilities can also be expected to develop new solar business models, including more utility Power Purchase Agreement (PPA) contracts with private developers, utility-owned PV projects with in-house or outsourced EPC contracts.

"The California utility market is quickly developing…[and] there are 1.2GW in contracts for solar PV. The current California interconnection queue already exceeds 8.4GW. The fastest growing portion of this market will occur in DG projects less than 20MW. Black and Veatch estimates there are 27GW of potential in California in this size range alone…"