SunEdison and alike poised to call the shots in U.S. solar market

Recently, North America-based solar energy provider SunEdison become the first U.S. supplier to surpass 100GWh in delivered electricity generation. It also activated a record 86 photovoltaic solar energy systems in the U.S. during 2008, totalling 25.5MW. The company has also been highly successful in raising capital to fund projects to the tune of US$450 million from Wells Fargo; HSH Nordbank; Union Bank, N.A.; and MetLife, Applied Ventures; Black River Commodity Clean Energy Investment Fund; MissionPoint Capital Partners; and Allco Renewable Energy Group Ltd.

Though much of the project finance required for current projects is proving difficult to find and the likes of Wells Fargo are yet to return to the investment floor in 2009, market research firm Gartner believes that PV power purchase agreements (PPA) will continue to grow in importance in driving solar energy generation in North America.

In a weekly newsletter to clients, Gartner noted that:

“The PV PPA firms that can continue to build their financing pipeline will be in a position to dictate the terms to the PV industry for the near-term future. Therefore, both established vendors as well as start-ups with products in the PV cell, inverter and monitoring markets will need to increase their efforts to address the PV PPA firms' concerns, as well as show both enhanced financial returns and minimal risk.”

This is a complete turnaround from 2008, noted Gartner, as vendors could pick and choose which customers to supply as shortages continued across the supply chain.

With financing the key constraint and over-supply of PV modules guaranteed, firms with access to capital set the terms and financing firms determine what technologies they are willing to accept or deny, based on the maturity of the technology and the viability of the vendor.

This could place added pressure on start-ups that lack both funding and mature product.