Solar Continues to Lead Renewables Boom
By Mark Kleszczewski
The boom in renewable energy generation continues unabated, fueled by growing demand, increasing efficiencies and ongoing declines in component prices. Of the many non-hydro renewable sources active in today’s energy marketplace, solar power’s manufacturers, suppliers and clusters are particularly poised to extend last year’s gains into an even more successful 2014.
Solar Boom Continues
According to the U.S. Energy Information Agency, the nation’s solar peak output was 2,326 megawatts (MW) in 2010, accounting for 0.22 percent of total U.S. electric generating capacity. By February 2014, this increased 418 percent to 12,057 MW — a 9,731 MW gain — which now accounts for almost 1.13 percent of total U.S. capacity.
The solar photovoltaic (PV) industry is set for rapid growth over the next five years, with up to 100 gigawatts (GW) annual deployment being targeted in 2018, notes NPD Solarbuzz’s latest market report. End-market growth is projected to increase annual PV module revenues, which are forecast to reach $50 billion in 2018.
Despite being severely hampered by overcapacity and declining operating margins during 2012 and 2013, the PV industry still grew by 34 percent during this two-year period. Having grown to more than 37 GW of end-market demand in 2013, the global solar PV industry is now set to hit a new milestone in 2018, reaching a cumulative installed capacity level of 500 MW. This strong demand will also further stimulate revenues for the industry’s manufacturers, with PV module revenues of more than $200 billion available during the five-year period from 2014 to 2018.
PV module average selling prices (ASPs) are expected to decline moderately over the next few years and are forecast to reach $0.51 per watt (W) in 2018. In addition, system prices will decline each year, driven mainly by cost reductions in balance-of-systems components and economy-of-scale improvements enabled by project developers and installers.
“Solar PV suppliers are benefiting from a less volatile pricing environment, compared to previous years,” says Finlay Colville, vice president, NPD Solarbuzz, in the report. “The industry will soon transition to a phase of profitable growth, with solar PV competing directly with traditional forms of energy.”
Solar Manufacturing Rebounds
Solar energy’s deepening integration into mainstream power bodes particularly well for vertically integrated companies like SunEdison. In late March, the solar technology manufacturer and service provider announced the shipment of more than 1 GW of Silvantis Solar PV modules, making the company one of the top five solar module manufacturers in the world. Growth was driven by strong demand for high-performance solar modules from SunEdison’s utility and commercial business groups, and other external customers.
“This is an exciting time for SunEdison because we have created a business model that leverages our innovations in silicon and module technology while minimizing capital requirements,” said Gokul Krishnan, general manager of solar modules, SunEdison, in a public statement earlier this year. “With our advanced silicon and crystal technology we were able to design highly efficient and reliable solar modules. To limit capital outlay we partnered with experienced contract manufacturers who assemble our modules to specification, under rigorous quality control.”
The company, which produces silicon, specifies the technology and production of solar modules, and provides ongoing monitoring of completed solar power plants, achieved the 1 GW milestone in less than three years.
As industry watcher Utility Dive noted recently, developers of utility-scale solar projects are focusing on ways to get projects into service as quickly as possible so they can take advantage of the 30 percent federal investment tax credit (ITC), which fades to 10 percent after 2016. Banks and developers are also working on ways to bring in revenue until they can sign long-term power purchase agreements with big utility buyers for future power needs.
One of the industry’s most closely-watched projects is in Pecos County, Texas, at First Solar’s 22 MW Barilla Solar Project, which is expected to begin commercial operation later this summer. Developers are very interested since First Solar will build, commission and operate the power plant, and offer the output to customers in the deregulated market, but is doing so on a speculative basis, without first locking in a long-term buyer for the electricity.
The company is also being followed as it partners with GE to develop a more cost-effective, utility-scale PV power plant design that combines First Solar’s thin-film CdTe modules with GE’s new ProSolar 1500 volt inverter/transformer system.
Technical innovations are also sparking growth in much-needed solutions for renewable energy storage, which is expected to grow rapidly in the next decade. Navigant Research estimates that worldwide revenue from advanced batteries for utility-scale energy storage applications will grow from $164 million in 2014 to more than $2.5 billion in 2023.
One of the companies to develop a viable storage system for this market is Renewable Energy Systems Americas Inc. (RES Americas), which in late March announced the operation of its first energy storage system. Located in Sunbury, Ohio, the system, which RES Americas will own and operate, is comprised of a specialized lithium battery that will provide a service called “frequency regulation” to PJM, the largest grid operator in North America.
“Leveraging our renewable energy, transmission and distribution construction experience, we are uniquely placed to excel in energy storage, whether as an IPP, or as an EPC for a utility owner,” noted Andy Oliver, senior vice president of energy storage and technology, RES Americas, in a company announcement.
RES Americas is currently marketing additional fully-developed frequency regulation projects for PJM and anticipates delivering a second 4 MW system this year in Ontario, Canada for the grid operator IESO.
Elsewhere in Ontario, the province’s burgeoning cleantech sector is attracting global companies interested in tapping into Canada’s $350 billion “infrastructure supercycle” over the next five years, while adding to the many solar projects now coming online in Ontario’s industrial heartland.
“It’s an exciting field that’s changing rapidly,” says Sean Dyke, Ec.D., CEcD, 2014 chair, Ontario Clean Technology Alliance (OCTA). “We definitely see a lot of potential to capitalize on the renewable energy market here, including solar. A lot of the projects signed on years ago are coming to fruition now. A big part of that is because southwestern Ontario offers a good supply chain, deep base of engineering talent and growing number of renewable energy technician programs from our many universities and colleges.”
Spurred on by an estimated $27 billion in private-sector investment and Ontario’s Green Energy Act of 2009 that helped ignite significant growth in the production of clean and renewable energy, cleantech and solar projects led by multinationals are among those expected to increase the fastest.
For example, Swiss-based, ABB Ltd., recently won an $80 million order from Canadian Solar Solutions to supply a 100 MW turnkey PV solar project for the Grand Renewable Energy Park in Ontario. The project is part of a greater $5 billion investment by Samsung Renewable Energy and its partners to create a green energy cluster of wind and solar power, with the capacity to generate 1,369 MW of renewable energy in the province. Canadian Solar Solutions is the engineering, procurement and construction (EPC) contractor for the plant.
Though many communities and regions are pushing to grow their respective solar economies, some large states like New York are taking their support of solar power to a new level and direction, aiming to tie public investments directly to private market forces.
“Solar is getting cheaper and it’s becoming more and more possible in more geographies,” says John Rhodes, president and CEO, New York State Energy Research and Development Authority (NYSERDA). “But it’s the growing demand for energy resilience and strong leadership in energy and environmental issues that’s behind our latest initiatives like NY-Sun. In just two years, we’ve already put in 316 MW of solar PV, which is more than in the entire previous decade, and that’s only set to accelerate.”
Furthermore, Rhodes says, though the state’s commitment and funding is driving new installations, an even-greater priority is to reduce costs and create the confidence for private industry to invest its capital and compete on its own without needing subsidies.
In early March, Gov. Andrew Cuomo announced $28.6 million in awards under NY-Sun, including 29 large-scale PV projects across New York, which will add 33.6 MW to the state’s solar capacity, and eight innovative projects to reduce costs associated with solar installations.
Rhodes adds that this was followed in late April by an additional, nearly $1 billion commitment to NY-Sun, aimed at significantly expanding deployment to 3,000 MW of solar capacity throughout the state by 2023 and guiding New York’s solar industry toward a more market-based, decentralized approach now shaping the state’s energy policy.
Expect Solar to Continue Expanding
While new initiatives such as President Obama’s call to eventually deploy 850 MW in solar power across the country and assist 50,000 workers enter the solar industry by 2020, show a growing commitment to solar at the national level, it’s local, regional and state-level efforts that are expected to accelerate today’s solar boom most quickly.
“In general, I think we can expect to see more and more cleantech companies coming to New York around the policies and programs that Governor Cuomo is driving, and around the market that is emerging throughout the state,” says NYSERDA’s Rhodes. “From generation to storage to smart grid technologies, we’re extremely optimistic. We really think that the solar industry can have a great future in New York.”
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