The U.S. solar market: mixed views

GreenTech Media held its Solar Market Insight Conference Monday and Tuesday in San Francisco, bringing together major players in residential, commercial and utility-scale solar to track the trends in the U.S. solar market at present and going forward.

Many of the panels and presentations are still available online for techno-geeks like me who couldn’t make to SF.

The GreenTech outlook is decidedly mixed – the residential solar market will continue booming through the end of the year, but could slow in 2013 and beyond.

– U.S. solar installations are expected to hit 3.2 gigawatts this year, a 71 percent spike over the 1.9 gigawatts installed in 2011. Next year growth could slow, with installations projected to grow to 3.9 megawatts, or about 22 percent.

– Solar leasing companies continue to claim an increasing slice of the residential market.  In California, leased residential systems accounted for 10 percent of residential installation; as of the second quarter of the year, they now make up more than 70 percent. In Arizona, the figure is more than 80 percent.

– On the utility-scale side — projects 50 megawatts and up — the picture is more complicated. Shayle Kann, GreenTech’s vice president of research, reported that the U.S. has about 2.2 gigawatts of utility-scale projects in operation, with another 4 gigs in construction and close to 6 more gigawatts in the pipeline for 2016-17.

The question is how many of the projects not in construction or in earlier stages of development will make it.

“If you don’t have a PPA, it’s harder and harder to find one,” Kann said, referring to power purchase agreements developers negotiate to sell power to utilities, which are critical to getting a project financed.

The trend is toward smaller-scale projects and much lower prices being offered on PPAs, he said. 9.7 gigawatts in the pipeline. Only utilties in states with renewable energy portfolios, such as the 33 percent mandate in California, are showing any appetite for large projects, Kann said.

– One issue hanging over both residential and utility scale is the sunsetting of the 30 percent federal investment tax credit at the end of 2016. The credit has been key to the growth of solar leasing and utility-scale financing — it draws in investors that need a healthy income tax credit.

As it stands now, at the end of 2016, it will go down to 10 percent and especially for utility scale solar, that prospective drop is already having an impact as developers look at the timelines for big projects.

These trends could have significant effects for solar development in eastern Riverside County, for projects on public and private land.

Can NextEra Energy get the 1,000-megawatt Blythe project – which it bought from the bankrupt Solar Trust of America — repermitted, financed and in construction by the end of 2016? Ditto BrightSource Energy and the 500-megawatt Palen project it bought from Solar Trust, along with its Sonoran West project, one of the two contracts the California Public Utilities Commission approved last week.

BrightSource officials have said they don’t expect Sonoran to come online till 2017, and they have no definite timeline for Palen.

The Coachella Valley, and surrounding areas, have looked to large solar projects as a source of good jobs for the region’s still struggling construction workers. The federal guidelines for solar development in the 148,000-acre Riverside East solar zone, between Joshua Tree National Park and Blythe, envisions 80 percent of the area covered with projects.

Whether any of that will pencil out now appears uncertain.

Environmental advocates have always argued that for solar, smaller rooftop and community projects are the better play, and the market may just prove them right.