Solar Market Heats Up

Source: Renewable Energy World

The US and Canada are waking up to the prospects of solar power generation. Prices for solar PV have fallen and utilities are increasingly developing projects that use the sun to generate electricity.

Tulsa, Oklahoma, USA — Solar power, once seemingly confined to the desert Southwest, is making inroads from Florida to New Jersey, Colorado to Nevada. Ron Kenedi, vice president of Sharp Solar Energy Solutions Group, said “the whole country is waking up to the idea of solar.” Take Florida Power & Light’s (FP&L’s) 25 MW DeSoto Next Generation Solar Energy Center in Arcadia, Fla. The plant is now one of the largest PV installations in North America, having overtaken NV Energy’s 17 MW facility at Nellis Air Force Base in Nevada. The DeSoto Center uses more than 90,500 crystalline-silicon PV panels mounted on tracking systems and is capable of generating about 42,000 MWh annually.

Then there’s the 21 MW Blythe power plant in Riverside County, Calif. First Solar developed and built the plant. Electricity generated by the facility is being sold to Southern California Edison (SCE) under a 20-year power purchase agreement. The Blythe plant is one of the largest thin film PV projects in the U.S.

Spawning developments like the Blythe plant, California continues to lead the U.S. solar market with 53 percent of U.S. PV on-grid installations, according to Solarbuzz, a market research business focused on solar developments. But solar power is no longer just a California thing.

“Now just about every place in the U.S. is being represented by solar,” Kenedi said. “In the Southeast, you have Tennessee and Florida; in the Northeast, Pennsylvania and New Jersey; in the West, Colorado, California and Nevada.”

What Recession?

The solar industry shone brightly in 2009 while much of the rest of the economy was in a blackout. According to the American Solar Energy Society, 33,000 solar installations were made in 2009, a 40 percent increase from the 251 MW in 2008 to 481 MW in 2009. The Solar Energy Industries Association’s (SEIA’s) U.S. Solar Industry Year in Review 2009 (PDF) said total U.S. solar electric capacity from PV and concentrating solar power (CSP) technologies climbed past 2,000 MW. Venture capitalists invested more in solar technologies than any other clean technology in 2009, pumping some $1.4 billion into solar companies, according to SEIA.

Hamm said utility-scale projects grew by 267 percent in 2009. According to SEPA’s latest ranking, top utilities were Pacific Gas & Electric Co. in California, Southern California Edison, Public Service Electric & Gas Co. in New Jersey, Florida Power & Light Co., San Diego Gas & Electric Co., Public Service Co. of Colorado-Xcel Energy, Arizona Public Service Co., Salt River Project in Arizona, Sacramento Municipal Utility District in California and the Los Angeles Department of Water and Power.

Supply and Demand

Competition from solar panels continues to make PV the fastest growing solar market in North America. PV is easier to finance, quicker to permit and easier to deploy than CSP. And panel costs are falling to the range of $3.50 to $5.50 a watt. Solar thermal costs remain largely unchanged at $7 to $8 a watt.

As Chinese manufacturers enter the solar market, competition has caused downward pressure on PV manufacturing prices. Aside from manufacturing, the solar power industry has recovered in the past year from oversupply to a healthier balance of supply and demand. Many solar programs were just launching when the recession hit, causing financing for big jobs to become congested. “The train got derailed for a little while,” Kenedi said. With high demand from European markets whose incentives will soon run dry and the continual growth of the U.S. market, the balance of supply and demand is now more equal.

“The market has grown faster than we thought it would,” Kenedi said. “We’re doing a good job at lowering the price of solar.” He said the cost of a PV system has dropped 35 to 40 percent in the last 14 months.

Incentives

Incentives work like a magnet to draw some power companies into renewables. One strong incentive has been the Treasury Grant Program, a cash grant that can be taken in lieu of the Investment Tax Credit, providing a 30 percent incentive to property that is part of a qualified facility, fuel cell property, solar property or small wind property. The 30 percent Treasury Grant Program was extended in October 2008 but is set to expire at the end 2010. As a result, many in the solar industry are rushing to meet the start-construction deadline of December 31.

Tom Fair of NV Energy said tax incentives need to be reliable for the solar industry to move forward. “It really does make for a more certain investment environment. If you know what your tax situation is going to be a couple years from now, then you can put your money into something.”

The European Union (EU) has found success in its feed-in tariff program. And the Ontario Power Authority (OPA) was commissioned last fall by the province to commence a feed-in tariff program similar to that of the EU. Ontario adopted the Green Energy and Green Economy Act that provides a feed-in tariff program for all renewables: solar, hydro, wind and bio energy. In addition, the Act also includes a commitment to energy conservation improvements, smart grid developments, and supports the creation of 50,000 jobs over the next three years. Ontario’s goal is to go off of coal by 2014, said JoAnne Butler, OPA’s vice president of electricity resources. This will mean shutting down coal-fired plants that produce 6,000 MW province-wide. Butler said Ontario is well on its way to meeting this goal.

The challenge to renewable growth in Ontario is lack of available transmission capacity, Butler said. OPA’s plan is to contract for 2,500 MW of renewables, but “that uses every megawatt of access capacity on the Ontario grid.” However, Ontario is working on a series of transmission system expansion projects aimed at opening up capacity to accommodate more renewable projects in the future.

Future Projections

Solarbuzz released a study in July projecting that U.S. solar will grow tenfold by 2014. On a global scale, the U.S. is fourth in PV production behind Germany, Spain and Japan. In CSP developments, the U.S. is No. 1 for CSP production with 431 MW as of March 2010. Spain was No. 2 at 231 MW. However, Spain ranked No. 1 in solar thermal growth, adding 220 MW from March 2009 to March 2010. The U.S. added 7 MW.

So is the future of solar in North America truly bright?