There will be almost no new utility-scale solar in the US in 2017 following the cut to the investment tax credit (ITC), according to GTM Research.
The drop from 30% to 10% will means practically no new utility PV plants will come online during 2017, the firm’s senior vice president Shayle Kann told PV Tech.
“The ITC reduction is going to have the biggest immediate impact on the utility scale sector. What are going to see is a huge boom in installations completed in 2016 and then a complete collapse in 2017,” said Kann.
“Some of the developers that are signing PPAs that start in 2018 or 2019 are still planning on constructing the projects in 2016 but then use a variety of ways through which they can bridge those few difficult years,” Kann said.
With deals with utilities all ready in place for after the ITC drop, developers who want to build before then need a revenue source for the interim.
“There’s two main ways. The first is what is called a merchant nose, so it’s a merchant project selling wholesale merchant power for a few years until the PPA kicks in.”
This involves more risk and more effort but should offer better returns until an appealing long-term PPA is on offer.
“The other is a bridge PPA, which is a short PPA that might last a few years with a different utility and at a lower rate before the full, longer term PPA begins,” he explained.
Merchant power plants have already gained a foothold in the US. First Solar completed an 18MW merchant plant in Texas earlier this week.