Hurricane Isaac dampened Republican spirits by delaying the start of their National Convention in Tampa, Florida, last month. But the tropical storm broke in plenty of time for delegates to arrive 78 miles east in Orlando at another conference where faith-based optimism was also mixed with political pessimism.
Solar Power International last week was the perfect opportunity to launch an update on the “state of the disunion” in solar.
The Interstate Renewable Energy Council's Annual Updates & Trends 2012 report released in Orlando, Florida, finds more harmony than the ongoing consolidation in the industry might suggest.
It makes vital reading for everyone from consumers to investors – not only on the state of the industry but where it might be heading.
“The solar market, while relatively young, is an increasingly important and vital part of the American economy,” wrote Larry Sherwood one of the report's authors.
The aim of the report is to provide data on PV installations by state and market sector to help industry and policymakers evaluate the effectiveness of policy and financial incentives in the US.
The main findings of the US Solar Market Trends report 2011 were:
- rates of installation doubled compared with the capacity installed in 2010;
- installations in the utility and commercial sectors were more than double 2010 rates;
- capacity installed in just six states – Arizona, California, Hawaii, New Jersey, New Mexico and New York – in 2011 was at least double the capacity installed in each state in 2010;
- More than 1.8GW of photovoltaic installations were completed in 2011 at 64,000 sites bringing the total installed cumulative capacity to 4GW;
- California remains the largest US market, with about 29% of the US capacity installed in 2011. But its dominance has slipped from its 68% market share in 2006.
Freshly returned from her trip to Orlando, Jane Weissman, executive director of IREC, told me that there was noticeable “cautious optimism” at SPI this year.
“What I heard on the floor was that there is optimism,” she said. “But also a realization that we do need to understand how we fit within the power and electricity market; how we fit within the political arena.
“There was cautious optimism but the solar industry is having a hard time, there's no doubt about it, with bankruptcies and so forth.”
IREC's reports can only hope to be a snapshot of an industry that at the moment requires an extremely fast shutter speed to capture its dynamics.
“It is not the same playbook as it was 20 years ago, 10 years ago or even just five years back,” said Weissman in the foreword to the report. “Changing markets, increased quality demands by consumers, on-again/off-again policies and goals, inconsistent practices — all contribute to a dynamic environment that keeps us forward thinking.”
Reasons for optimism can be found in the pages of IREC's report. The US market posted another banner year in 2011, with cumulative installed grid-connected PV capacity reaching 4GW, thanks to the Investment Tax Credit, the 1603 cash grant and state-based initiatives such as Renewable Portfolio Standards and Net Energy Metering.
PV installation capacity in 2011 more than doubled compared with 2010 installations to 1,845MW – that figure is more than ten times the capacity of PV installed in 2007.
Last year, 64,000 installations were completed, bringing the total number of installations to 220,000 grid-connected installations, 188,000 of which were residential.
In 2011, 324MW was installed in the residential sector, 822MW in the non-residential sector and 698MW in the utility sector, a trend that is set to continue as utilities strive towards Renewable Portfolio Standards.
Five of the ten largest PV installations in the United States were installed last year. The two largest installations to start powering the grid were the 49MW Mesquite Solar 1 Plant in Arlington, Arizona, with a PPA with Pacific Gas & Electric and the 35MW plant in Webberville, Texas, which supplies power to Austin Energy.
Expect those large MW projects to grow in size and number over the next few years. First Solar last week announced power purchase agreements with PG&E for its 32MW Lost Hills project in Kern County and the 40MW Cuyama project in Santa Barbara County. They are both subject to approval by the Californian Public Utilities Commission.
California's 33% Renewable Portfolio Standard by 2020 is the main driver for utility-scale projects. In 2011, 626MW, equivalent to 90% of the utility-sector installations are in states with RPS requirements, said the report.
But across all sectors, growth rates were healthy last year thanks to the federal ITC until 2016.
“Developers and installers can plan and market their products and consumers can make rational decisions without arbitrary incentive deadlines,” said Sherwood.
Last year, the 1603 cash grant also ensured the completion of 2,235 projects were that were awarded US$795 million in lieu of the ITC.
Solar gets a bad rap for the government money it has received through the Department of Energy's 1705 loan guarantee programme. But the technology did less well from other parts of the stimulus funding through the American Recovery and Reinvestment Act 2009. Solar projects received 17% of the cash grant last year – most of the rest of it went to wind projects.
But state-based initiatives such as Renewable Portfolio Standards and Net Energy Metering are often the longer-term market drivers.
Rusty Haynes, project manager at the Database of State Incentives for Renewables & Efficiency (DESIRE), writes in the IREC report: “Solar markets continue to expand and evolve rapidly in many US states, yet they are still inhibited by policy uncertainty and, especially during the past year, market and industry turmoil. In some states, policymakers have moved proactively to ensure that growing solar markets remain strong, while in others, policy inaction has contributed to a shriveling market.”
California still tops the table for grid-connected PV capacity with 537.8MW installed last year, more than double its 255.6MW installed last year and a long way ahead of second-placed New Jersey 306.1MW and third placed Arizona with 287.8MW which have also seen giant leaps in increased pace of installations from 2010 to 2011. [See table]
State policies are extremely important to the solar industry and IREC's work is vital in the US, a non-homogenous market with 18,000 different local jurisdictions, many of them with their own unique set of bylaws on land use, permitting and interconnection.
IREC has clocked up 30 years of flying hours navigating this confusing but promising territory in the electric power industry by working with utilities and regulators to advance ideas that would be no-brainers in other countries such as third party ownership which unlocks investor potential and net metering.
IREC has helped facilitate the development and expansion of net metering policies and interconnection procedures in 40 states since 2007.
As of August 2012, over 180,000 net-metered systems have been installed in the United States, said the report.
Joseph Wiedman, a partner at law firm Keyes, Fox & Wiedman, said: “This mix of policies is our focus because, collectively, they facilitate a healthy marketplace for renewable energy in the US. In short, now that most states have implemented net metering and interconnection rules, IREC is ensuring they work as they were originally intended, and that they can adapt to new conditions.”
Significant developments this past year were chalked up in California, Colorado, Hawaii, Connecticut, Delaware, Illinois, Maryland, New Jersey, New Hampshire, New York, Texas and Vermont.
But as regulators in the state with the largest solar market in the US, the California Public Utilities Commission gets a lot of attention from IREC.
In May, the CPUC ruled in favour of IREC’s interpretation of the meaning of a key phrase in the state's net metering statute, which could see NEM capacity available in the state nearly double to 5,000 MW.
IREC helped implement Colorado’s community solar gardens (CSG) statute and while Connecticut got its first SREC market.
Utilities will enter into 15-year contracts for “Zero- Emissions Renewable Energy Credits” (ZRECs), capped at US$350 in 2012, from customer-sited facilities larger than 100kW and up to 1MW. Utilities will spend US$8 million annually on ZREC contracts, said the report, while Connecticut’s Residential Solar Investment Program aims to provide US$40m to support at least 30MW of residential PV by 2022.
In May 2012, Maryland amended its RPS to increase its solar carve-out.
But New Hampshire made major changes to its RPS policy in June 2012, creating a new carve-out for “useful thermal energy” which will benefit biomass and solar water heating, but at the expense of solar electric.
New Jersey, the second largest PV market in the US, enacted emergency legislation to remedy its oversupplied SREC market. Meanwhile, the Public Utilities Commission of Texas (PUCT) adopted “third party ownership rules” to help attract more investment in solar in the state where everyone in the electric power industry wants to be because Texans love their AC almost as much as those oil and gas fields.
“Texas is the largest electricity market in the United States; more electricity is consumed in Texas than in any other state,” said the report. “The reduction of major regulatory barriers related to third-party ownership will greatly benefit the Texas solar-electric market and likely will attract significant private investment in solar throughout the state, especially in the residential sector, where third-party ownership is growing swiftly nationally.”
But the really good news for the PV industry comes down to these two capacity figures as at the end of 2011: 4GW in the US; 51GW in Europe.
Room for growth and optimism indeed.