Launch of world’s largest PV plant drives home the pro-ITC message

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US interior secretary Sally Jewell yesterday flipped the switch on Desert Sunlight, the 550MW PV power plant built by First Solar that for a few months at least will be the world’s largest.

Jewell attended a ceremony at the Riverside County, California site, during which the vast project was officially inaugurated.

The US Department of Energy marked the occasion by publishing a report yesterday highlighting the key role played by its Loan Programs Office (LPO) in supporting the first wave of ultra-large utility-scale solar plants in the US.

Desert Sunlight is the last project to reach completion of a batch five plus-100MW utility PV plants that were supported by the LPO through a US$4.6 billion loan guarantee programme.

As the report details, the guarantees were awarded in 2008, when the US had only 22MW of utility solar capacity in the ground and experts, including the US Energy Information Administration (EIA), were predicting only a small market for PV at this scale; the EIA projected just 140MW of utility-scale PV would be built by 2015.

The guarantees enabled a clutch of huge projects – Agua Caliente, Antelope Valley, California Valley, Mesquite and Desert Sunlight – to fill the gap created by the lack of commercial lenders willing at the time to provide the loans needed to make such big and potentially risky plants viable.

The completion of Desert Sunlight brings the total capacity now online as a result of the loans to just over 1.5GW. But perhaps more important has been the wider impact of the loan programme on the utility-scale solar market in the US.

According to the DOE’s report, since the five projects received the backing of the LPO, 17 further projects larger than 100MW have been financed, without the need for support through the programme. This represents around 3.6GW of new capacity, while overall utility PV capacity in the US had reached a cumulative 8.1GW by the third quarter of 2014, according to the report.

At the same time, power purchase agreement costs for utility-scale solar have decreased by 60% between 2008 and 2014, underlining the extent to which the financial community has become more comfortable with investing in PV power plants.

As a symbol of how far attitudes towards utility-scale solar have changed in the US, there can be few better than the Solar Star project being built by SunPower, also in California. At 579MW this project will overtake Desert Sunlight when it is completed later this year as the world’s largest project. Significantly, unlike Desert Sunlight, it has been built without support from the LPO.

“Without question, the Energy Department’s Loan Program Office has helped to grow the US solar industry, jump-starting the widespread development of utility-scale solar,” said Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA) in a statement following the publication of the report.

“With an estimated 20GW of solar capacity currently installed in the United States, and another 20GW in the pipeline for 2015-16, it’s clear that clean, renewable solar energy will play a major role when it comes to powering America’s future. We congratulate the Energy Department on its successful programme and look forward to working with policymakers, regulators and lawmakers nationwide on new ways to increase the development of solar in the future.”

Solar propaganda

Indeed, the success of the loan guarantee programme highlighted by the report may provide the US solar industry some useful ammunition as it gears up to help push through the proposal last week by President Obama to retain the solar investment tax credit (ITC) at current levels.

The ITC has arguably had an even more profound impact in driving up capacity and driving down the cost of solar in the US than the loan programme, but faces being cut from 30% to 10% at the end of 2016 unless Obama's proposal wins through.

As a piece of propaganda to help those making the case for the ITC as the proposal gets batted around Congress, the DOE’s report will certainly be a timely fillip in the quest for the much bigger prize.

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