2011 Solar Outlook
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Share Solar CEOs gathered at Solar Power International in October were resolute on one matter: the industry will thrive when a National Renewable Energy Portfolio Standard is in place, combined with an extension of the federal tax credit program and federal loan guarantees for the solar industry.
According to an October 25 report by Bloomberg New Energy Finance, policy measures such as tax credits, capital expenditure grants, incentives and renewable electricity credits will be key drivers of U.S. solar for at least the next three years.
"Policy, rather than sunshine, will remain the U.S.'s greatest solar resource for the next few years," said Milo Sjardin, Bloomberg New Energy Finance's U.S. head of research. He said that by the middle of the decade, the U.S. retail solar market will be driven by fundamental, unsubsidized competition, which could transform the U.S. into one of the world's most dynamic solar markets.
Tom Fair, vice president of renewables for NV Energy, said the current solar environment has become stable as a result of Congress extending tax credits and creating a duty grant. "If those kinds of tax incentives are stable for a period of years, 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 some money into something now."
The Treasury Grant Program (TGP) is one of the primary incentives from which solar developers benefitted in 2009 and 2010. The TGP allows the owner of a commercial solar project to receive a 30 percent grant in lieu of taking the solar Investment Tax Credit (ITC). Applicants are eligible for the grant only if they start construction on projects by Dec. 31, 2010 and complete construction by Dec. 31, 2016. The Solar Energy Industries Association (SEIA) has encouraged the White House and Congress to extend the TGP start date through Dec. 31, 2012, either as it currently exists or through a direct payment mechanism.
Rhone Resch, president and CEO of SEIA, said the TGP has garnered bipartisan support and that the administration has stated it is a top priority.
"I think there is broad recognition that this program has resulted in hundreds of thousands of jobs," Resch said. "It's probably the highest return on a dollar by dollar basis to the taxpayer of any of the provisions created in the stimulus bill.
In addition, Resch said, there is a 40-50 percent chance that a tax bill will be created to address expiring Bush-era tax credits, which may also include the TGP.
According to EuPD Research, extending the TGP by two years would add nearly 65,000 new solar and related jobs to the workforce by 2015 and more than 5,000 MW of solar energy by 2016. Resch said many of the jobs that would be added are in the states that have been hardest hit by the economic downtown: Ohio, Illinois and Pennsylvania.
In Canada, where the Ontario Feed-In Tariff program has helped stimulate solar growth and is weaning the province off of coal, Elizabeth McDonald, president of the Canadian Solar Industries Association (CanSIA), said the tariff is a stimulus to foster growth. But it comes with the understanding that as costs come down it will no longer be needed.
"While governments want to have feed-in tariffs, they also want to be assured that they're not in it forever," McDonald said. "You have to counterbalance your request for aggressive tariffs with a promise that with more uptake and a larger market, costs will go down."
The cost of a typical PV module has dropped by more than half over the past two years, according to research by Bloomberg New Energy Finance. Still, the cost of photovoltaic (PV) and concentrating solar power (CSP) generation is just below $200/MWh, nearly four times the equivalent cost of a coal-fired power plant at $56/MWh. It's also between two and four times the cost of onshore wind power.
While solar may not be the cheapest option, Julia Hamm of SEPA said it is becoming increasingly appealing to the energy industry.
"It's pretty much the only technology option that's coming down in price as everything else goes up," she said. "Most utility folks recognize at this point that while solar might not be their cheapest option today, it very soon could be."
During 2009 and 2010, the solar market experienced an oversupply as demand slowed during the recession. Now supply and demand have come back more into sync, according to many solar leaders.
"Now we have a normal situation where supply and demand are fairly well-matched," said Tim Keating, vice president of marketing and field operations for Skyline Solar. "The expectation is that it will stay that way through 2011."
If 2010 has been a year of construction due to the Treasury Grant Program and other incentives, 2011 is slated to be a year of completion.
On October 25, the Department of the Interior approved the 1,000 MW Blythe Solar Power Project on federal land in southern California, the largest solar project to date planned on U.S. public lands. Interior Secretary Ken Salazar hailed the $6 billion project, to be built in the Mojave Desert near Blythe, Calif., as the start of a boom in solar power on federal lands. The Blythe project, which is being developed by Solar Trust of America, was the sixth solar development approved this fall by the Interior Department. A seventh was approved as this article went to press. All are anticipated to start producing electricity by the end of 2011 or early 2012. The seven projects represent more than 3,000 MW of installed capacity.
Also driving solar projects is collaboration. For example, Public Service Electric and Gas in New Jersey and Petra Solar have collaborated to develop a smart-grid-enabled, 200 W panel with micro inverters and deploy them on 200,000 utility poles, totaling 40 MW of generating capacity. Petra provides the equipment, which is owned and installed by the utility. The project is one of hundreds of solar projects demonstrating utilities' growing adoption of renewable technology.
The number of solar projects in the works has resulted in a ballooning of the U.S. solar jobs market. The National Solar Jobs Census 2010, conducted by The Solar Foundation and Green LMI Consulting with technical assistance from Cornell University, revealed that more than half of solar employers nationally plan to increase their workforce in the next year.
Andrea Luecke, executive director of The Solar Foundation, said, "Solar jobs are on the rise and expected to grow 26 percent in the coming year." (For more on the outlook for green energy employment, turn to page 22.)
Technology Innovation
The U.S. is quickly becoming the world's largest CSP market. Roughly 80 MW of CSP is expected to come online by the end of 2010, 10 times more than 2009. In addition, the U.S. has over 23 GW of CSP under development. According to a report by ABS Energy Research, the U.S. and Spain will continue to be the major CSP producers in 2011.
While large-scale CSP developments may compose the bulk of capacity installations, the number of PV projects continues to grow. PV producers are faced with falling costs, which are now below CSP costs, as well as simpler permitting and financing processes.
The largest U.S. PV project to date is the 25 MW DeSoto Next Generation Solar Energy Center project owned by Florida Power & Light (FP&L). Mike Taylor, director of research for SEPA, said many PV projects are shadowing the DeSoto model. Solar PV projects 5 to 25 MW are becoming increasingly mainstream, Taylor said.
Many solar PV developers in California choose to keep projects under 20 MW because a transmission reservation is required for anything over 20 MW, which often takes several years to permit. For 2011, many 5 to 25 MW PV projects will be pursued in states not generally thought of as major solar markets: Florida, Ohio, Illinois and Texas.
Another growing trend in PV is toward more distributed generation. "Solar can strengthen reliability, particularly if solar PV is distributed widely across a utility's service territory," said Resch of SEIA.
Keating of Skyline Solar said that distributed generation is appealing to utilities because it holds the value of the power. For a power plant 100 miles away from its distribution source, 30 percent of the power could be lost in transmission.
"With power plants that are modular, every bit of power gets used and is not lost. It's 30 percent more effective from that alone."
Keating said another benefit to distributed generation is easier permitting processes. And permits for smaller projects are easier to obtain. Systems under 1 MW AC can often be permitted in a few days, while 1 to 20 MW systems located on privately owned land or on rooftops can be permitted in one to six months.
McDonald of CanSIA said she foresees distributed generation solar continuing to be a leading renewable in 2011 under Ontario's Feed-In Tariff program. "I think we'll see a significant number of distributed generation projects of 10 MW and over based on the contracts announced by the Ontario Power Authority."
Rooftop projects are a distributed generation trend that is growing in both the U.S. and Canada. Much like the PV panels installed on rooftops of many Walmart, Costco, Kohl's and Staples stores in the U.S., Canada started integrating PV on the rooftops of some Loblaw's grocery stores in 2010.
McDonald said building integrated PV (BIPV) is a growing trend in France and one that Canadian developers are watching closely. BIPV uses PV materials to replace conventional building materials in parts of a building such as roofs, skylights or facades.
While solar has stood alone until now in terms of generation, FP&L plans to push technology boundaries in 2011 when its hybrid solar facility enters service. The Martin Next Generation Solar Energy Center, which is projected to be among the first hybrid facilities in the world to connect solar with an existing combined-cycle power plant, will start producing electricity by early 2011.
"The Martin plant will be the first of its kind," said Buck Martinez, senior director of solar development for FP&L. "We will be displacing 35 MW of natural gas when the sun is out."
With the creative exploration of hybrid solar plants, the continued growth of distributed generation PV, and the possibility of new innovation like BIPV, solar technology is aimed at widespread North American expansion in 2011. If developers are met with positive renewable incentives and policies, the stability and reliability of the industry will only be reinforced.
Solar: 411
While still at very small penetrations, solar is making incredible progress. Ten years ago, global solar PV installations were at 170 MW. This year, due to solid policy support and rapid price declines, they were at 17,000 MW. And in 2010, the U.S. solar PV industry finally broke the 1 GW mark in installations. The Solar Energy Industries Association projects that the U.S. will be installing more than 20 GW of capacity each year beyond 2020.
The Canadian province of Ontario represented a major growth market for solar PV as well. Helped out by a generous feed-in tariff program for roof and ground-mounted systems, the Ontario solar market became the third largest in North America, behind California and New Jersey. But pay attention to the program in 2011: The Ontario Power Authority may decide to reduce tariffs further if the market overheats.
This year also formed the foundation for solid growth in the concentrating solar power space in 2011 and 2012. More than 1 GW of projects were approved by the U.S. government, with a number them already under construction. If 2010 was the year of solar PV, 2011 will be the year of CSP in the U.S.
- Stephen Lacey, RenewableEnergyWorld.com.
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