Anne L. Fischer, Senior Editor, firstname.lastname@example.org
The US financial world was anything but rosy in 2009, with the possible exception of the solar sector.
According to a December 2009 market report by GTM Research of Cambridge, Mass., grid-connected photovoltaics (PVs) grew from 320 MW in 2008 to 440 MW in 2009 – and could go as high as 545 MW by the end of this year. Titled The United States PV Market through 2013, it also states that, from 2000 to 2008, grid-connected capacity in the US grew at an average of 71 percent per year, from 4 to 290 MW, putting the US third in global demand behind Germany and Spain.
Looking a bit farther out, report authors Shayle Kann and Daniel Englander find that the US will experience the most rapid growth of any global PV market over the next four years and will take Spain’s place as the second in the world behind Germany. Kann noted that, depending on what happens with Germany’s feed-in tariff policy, the US will either remain behind Germany until 2013-2014 or could surpass it as early as 2011.
“From 2000 to 2008, grid-connected capacity in the US grew at an average of 71 percent per year, from 4 to 290 MW, putting the US third in global demand behind Germany and Spain.”
In the US, electricity is regulated at the local, state and federal levels, with state public utility commissions setting prices and governing renewable energy programs. Therefore, the US market has to be looked at on a state-by-state basis, which is both a blessing and a curse, according to Kann. In countries like Germany and Spain, where one incentive creates the market for the entire country, “it makes things simpler and largely guarantees a good rate of return.” However, he said, “The downside is that if one policy is taken away or reduced, it can send shock waves throughout the industry.”
He pointed to what happened in Spain last year after the country cut and capped its tariff program, sending the global PV industry into a downward spiral. In the US, on the other hand, not having a single plan means that changes in incentive from state to state won’t have a huge effect on the global market. Individual state incentives, however, can boost that individual market. California is a case in point, as it currently accounts for more than 50 percent of the national PV demand, followed by New Jersey, Colorado and Arizona. By 2012, New Mexico, New York, Nevada and Massachusetts will join what Kann calls “second-tier markets,” and, along with Arizona and New Jersey, will reach 376 MW of installed PV.
The holy grid
The report analyzes what GTM Research calls “price convergence” – also known as grid parity – the price differences between PV power and electricity from the grid in residential, commercial and utility-scale markets. In locations with high demand, such as New Jersey and California, price convergence has been achieved in some markets, due in large part to strong state incentives. Kann expects that, of the 16 leading solar-producing states in the US, 11 will achieve convergence in the commercial sector by 2012, and 10 will do so in residential. The growth in utility-scale PV will be driven by renewable portfolio standards, along with numerous economic and operational benefits of utility-owned PV. Residential PV installations have been slower because of upfront costs and the time it takes for payback, but new solar financing programs through leases or power purchase agreements will spur this sector.
Kann sees the US as the only country that will be able to sustain a long-term market because the demand for electricity is high, and there is vast open land for development. The strong market will ripple through the entire supply chain, with demand increasing for everything from silicon to panels. Kann noted that Chinese company Suntech, the largest module maker in the world, recently announced a manufacturing facility in Phoenix – initially bringing more than 75 jobs to the US. He indicated that, although US-based PV manufacturing won’t dominate the global market, there will be a strong base in the US.