Report: Sizing the U.S. solar PV opportunity

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By Vishal Shah, Barclays Capital Solar Energy

Investment Conclusion

Yesterday’s Senate version of the stimulus package included a new grant plan that would enable renewable energy producers to claim a 30% cash grant from the U.S Treasury Dept. in lieu of the 30% investment tax credit. This proposal, aimed at addressing the challenging conditions in the tax equity market, is a significant positive, in our view, as investor expectations were very low for any inclusion of refundable ITC in the Senate package. Since the House version of stimulus package also includes a 30% grant by the DOE, we believe the probability that some version of refundable ITC could likely get passed by the Congress is high. Our analysis presented in the note suggests that potential solar PV opportunity resulting from the inclusion of refundable ITC and government loan guarantee program could be as large as 5.5-7.5GW over 3 years, with majority of the growth likely to occur in 2010 and 2011. In our view, companies with large US market exposure and especially addressing the large scale commercial/utility markets (SPWR, FSLR) are likely to be the primary beneficiaries of the stimulus package. Report published with permission of Barclay’s Capital Solar Energy.

– Two major proposals to solve the renewables financing problem: Both the House and Senate have made proposals to address the financing challenges impacting solar PV and renewable projects in the U.S. Solar projects need debt (~30%-40%) and equity (~60%-70%). The debt

markets are frozen and equity investors such as banks and insurance companies have limited appetite to take advantage of the 30% investment tax credit. In order to address the debt issue, a proposal for government loan guarantee program has been made that could potentially reduce the cost of capital and increase the availability of capital. In order to address the tax equity issue, both the House and Senate have proposed some version of refundable ITC. We estimate that if both these proposals are approved, incremental solar PV demand in the U.S through 2011 could be as large as 5.5GW to 7.5GW. We see 4.4GW of commercial solar PV demand and 1.1GW of solar PV utility demand in the base case scenario and additional 1.5GW demand from federal solar roof-top program, 500MW utility demand from Federal RPS in the upside scenario. Even if the commercial solar PV opportunity turns out to be 50% below our estimate, the US solar market could still grow between 3.5GW and 5.5GW through 2011.”

– Commercial Solar Opportunity: In our view, commercial solar projects can generate IRRs in excess of 10% (assuming refundable ITC, $4/W system ASPs) in 9 states in 2010 and IRRs between 5% and 10% in 6 additional states. In 2011, we expect commercial solar projects to generate competitive IRRs in 5 additional states (assuming $3.50/W system ASPs). Assuming 0.5% solar energy penetration in these states, total incremental solar PV opportunity over the next 3 years could be as large as 4.4GW or 10x the size of current annual installations in the U.S and almost comparable to the size of the global solar market. Our analysis does not include potentially lower cost of capital resulting from the loan guarantee program. We believe the $8 billion loan guarantee program proposed by the House has the potential to support nearly $80 billion worth of projects and can facilitate low cost financing for the 4.4GW worth of commercial solar projects through 2011.

– Utility Solar Opportunity: According to SEPA, approximately 1.5GW worth of solar PV projects were in various stages of contract cycle (announced contracts, RFPs, proposals) as of September 2008. Additionally, during the recent earnings call, SunPower management highlighted that their pipeline of opportunity in the US utility market is nearly 1GW. Assuming additional 1.5GW worth of utility contracts were being discussed in 2008 and not included by SEPA, we believe approximately 3GW of utility scale solar PV are likely in various stages of negotiation. We assume that roughly 40% of these projects are completed by 2011 timeframe resulting in incremental 1.1GW of demand. 

– Federal Solar Rooftop Program and Federal RPS – Potential Sources of Upside: President Obama has proposed a Federal RPS program mandating all states to generate up to 10% of electricity from renewables by 2012 and 25% by 2025. Assuming 500MW incremental demand from Federal RPS program and 1.5GW incremental demand from Federal rooftop program – we see up to 2GW of incremental upside over the next 3 years.

– Cost to the taxpayer: We estimate the cost to the government in the 5.5GW to 7.5GW demand scenario to range between $5 and $7 billion (assuming 30% debt ratio in projects, loan guarantee program and 30% refundable ITC for 70% of the equity portion)

– With respect to 2009 demand impact, taking SunPower’s guidance ($2B assuming financing improves, $1.6B assuming financing does not improve) and assuming $5/W system ASPs, we believe potential demand upside from refundable ITC could be nearly 85MW for SunPower, 80MW for First Solar and 100MW for other solar PV companies.


19 August 2021
The utility-scale PV market is poised for exponential growth and yet the industry still has many fundamental opportunities to improve on standards and best practice. Tracker shade loss has been one of those topics that deserve more attention, but has been typically handled by derate factors rather than trying to accurately forecast the loss over the life of the system. Join Nextracker’s subject matter experts, Aron Dobos and Neelesh Umachandran, and Rounak Kharait, director of solar energy assessments at DNV, for a webinar about why shade modeling matters and recommendations on what the solar industry should do about it.
25 August 2021
Energy Next is a new industry exhibition focusing on the latest renewable energy and energy efficiency technology, which will be held for the first time in 2021 in Sydney, Australia alongside the Clean Energy Council’s Australian Clean Energy Summit, the peak gathering of leaders driving Australia's energy transformation. Organised by the same people behind Australia’s largest clean energy event, All-Energy Australia, Energy Next will give visitors two days of access to key suppliers in the industry, free-to-attend professional development and industry workshops, and networking opportunities to better understand clean energy issues and solutions and learn about the latest developments in this transformational, dynamic sector.
25 August 2021
The Intersolar Summit Brasil Nordeste takes place in Fortaleza, Brazil. It addresses leading local and international experts on solar power and renewable energy in the region. The Summit’s mission is to provide in-depth education, enable high-quality networking opportunities, expand the use of PV technologies at regional and national level and strengthen the local PV industry. The Intersolar Summit Brasil Nordeste is organized by Intersolar South America - Latin America’s largest exhibition and conference for the solar industry: Solar Promotion International GmbH, Pforzheim, Freiburg Management and Marketing International GmbH (FMMI) and Aranda Eventos & Congressos Ltda, São Paulo as co-organizer.
25 August 2021
Join us to hear directly from the CTOs and heads-of-research from the top-20 cell/wafer producers to the PV industry today. The event will focus on predicting the key metrics underpinning the next big shift to n-type with answers to the key questions: When will the transition to n-type happen? Which companies will be first to 10 GW capacity and production? Who will be the key equipment suppliers for the new production lines? Which n-type process flow/architecture will emerge as the front-runner? What will polysilicon purity and wafer thickness levels look like for optimized n-type manufacturing? What will the upstream poly/wafer supply-chain look like in 5 years from now?
26 August 2021
In this webinar, JA Solar will present its product portfolio based on the latest technologies to improve your PV projects, ensuring maximum reliability and performance. During the webinar we will receive insight from JA Solar about its solar technology roadmap and how the manufacturer is providing customers with innovative solutions to suit their needs, while we will also analyse how to determine the best product solution for each solar project.
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The 38th European Photovoltaic Solar Energy Conference and Exhibition will be held online from 6 - 10 September 2021, allowing PV experts from all around the globe to participate with just one click! The EU PVSEC is the world's leading forum for PV Research and Development and the biggest Conference on PV Solar Energy worldwide. That is why PV experts from all around the globe are keen on gathering together each year to be part of this specialist’s event, to present and discuss the latest developments in Photovoltaics, to network and to conduct business.

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