It’s a challenge to summarize what transpired over four days at an event with 600 exhibits, 70 concurrent sessions (forcing choice between 6 at a time), 15 manufacturer-sponsored hands-on training sessions, 10 workshops, plenary sessions, parties and, oh, did I mention solar-supportive keynote remarks by Vice President Joe Biden to an enthusiastic audience. With participants from over 75 countries, it’s easy to see why Solar Power International (SPI) claims to be the largest and fastest growing solar conference in North America. But let me try to extract a few themes from this mid-September event sprawled across all four Exhibit Halls at the Anaheim Convention Center.
Clearly the industry is growing. In advance of the conference, the Solar Energy Industry Association and GTM Research released their quarterly update. With 1,393 Megawatts of PV capacity installed in the second quarter, the US Solar industry remains on track for an annual forecast total of 7,700 MW. Of this, 840 MW (60%) was installed in California. (A brief reminder that the capacity of a typical nuclear powerplant is 1,000 MW.) The fact that the California Senate and Assembly passed SB350 increasing the state’s current Renewable Energy target of 30% by 2020 to 50% by 2030 days before SPI added to the conference’s buoyancy. Repeatedly cited was the statistic that California has over 55,000 employees working in the industry (more employees than the state’s top 5 utilities combined).
Clearly the industry faces challenges. The major one is the currently scheduled expiration of the 30% residential tax credit and reduction of the commercial investment tax credit (ITC) from 30% to 10% fifteen months from now, the Administration’s request for a permanent extension of the ITC not withstanding. A Bloomberg forecast released at the conference anticipates that without an extension, 2017 will see installation activity dropping to its 2012 level. The loss of the tax credit would hit California’s businesses as hard as elsewhere. In addition, the fact that California’s Public Utility Commission (CPUC) is in the process of redesigning the utility rate structure, including deciding on an appropriate level of compensation for customers who generate their own solar energy, has the industry on edge. Utilities have requested the compensation (or credits) allowed solar customers be reduced by 40%, and that fixed fees be added to solar users’ bills. (If this sounds completely contrary to the legislative action on SB350 cited above, welcome to the world of Government.)
But beneath these Good News / Bad News headlines, several themes emerged that cut across the gazillion specific new product and service announcements.
Energy Storage developments are booming with a variety of technologies and products. Over 50 firms provided products or services related to Storage. Those in California are as diverse as 90-year old Trojan Battery Company of Santa Fe Springs and Milpitas-based JuiceBox Energy, a start-up barely out of the garage. Many clustered together on the exhibit floor in a zone known as the “Energy Storage Pavilion.” The CPUC mandate to the state’s three largest Utilities and other energy service providers to procure 1.3 GW of energy storage by 2020 creates an immediate market in California. And the recognition that commercial electric customers can utilize storage to reduce their bills through reductions in their peak demand charges creates a market rationale for growing storage demand beyond the utility mandate.
Finance is another area experiencing dramatic change. While the discussion only a couple years ago focused on lease or buy, a plethora of new financial instruments and capital sources have emerged. Sessions and exhibits provided information on new approaches to debt financing for non-residential projects (which appears to focus on financial support for Commercial and Industrial (C&I) customers, a growing solar niche), Tax equity markets, and the pooling of solar project cash flows (in what’s become known as a YieldCo). The good news is that investors (not just system owners) are seeing value (!) in PV installations.
And of course there were new panel developments, racking system improvements, Inverter advances and the like.
So what’s the take-away? The Solar industry is growing through its increased cost-competitiveness as a result of new product and service innovation. This dynamic was well captured by Vice President Biden’s comment, “Anyone who thinks it (Solar) is not happening just take a look at the market. It’s a competitive choice for consumers. … Look, this isn’t a government mandate, this is the market working.” Yes, but the uncertain future of tax credits and utility pushback (in California and elsewhere) continue the uphill slog.
Yikes! Is California’s interest in Solar Energy Collapsing?
GTM Research and the Solar Energy Industries Association (SEIA) released their US Solar Market Insight 2015 Year in Review on Wednesday, March 9. We’ve been tracking their PV capacity reports for the past several years, and in the figure below we plot the 2015 capacity increases reported in their Executive Summary.
While there was strong national growth in installation capacity this past year, California’s capacity additions were less than in 2014. After a couple years of providing over half the annual capacity additions in the country (57% last year), California’s share has fallen to a mere 45%.
Annual PV Installations: California and U.S. Total (2010-2015)
We picked ourselves up off the floor and asked “What is happening; is this for real?” So we called GTM Research and checked other sources to find out what in the world was going on. Turns out that despite the disastrous looking change, solar growth in California remains alive and well.
Turns out the primary reason for the downturn is a sharp decline in Utility-scale PV projects. According to GTM, these additions fell to the vicinity of 1800 MW last year. [I wish we could afford the $2000 – $6000 for the full report that our SEIA Membership entitles us to so that we could access all the GTM data. But we live in lean times and use information from diverse public sources such as US Energy Information Agency (EIA) and California Energy Commission (CEC) as well as GTM’s summaries to inform our understanding.]
According to EIA information published in late February, it appears that Utility-scale solar PV expanded by 2000 MW in 2014, but only 1100 MW (preliminary) in 2015. Data from diverse sources rarely match-up year-to-year, but the trends are identical—California’s utility-scale PV installations experienced a sharp reduction in 2015.
After checking the CEC’s most recent Tracking Progress, Renewable Energy-Overview, we can see why—the utility industry is ahead of target for meeting the state’s 2016 Renewable Portfolio Standard (RPS) 25% goal. The industry achieved almost 25% renewables in 2014! The state added approximately 4000 MW of utility scale PV capacity between 2013 and 2015. Utilities are meeting their target early; the apparent slowdown is a temporary pause while utilities work on the installations that will get the state to 33% renewable electricity by 2020.
Distributed generation activity remains strong in California, both in the Residential and Non-Residential segments. The state’s residential customers generated demand for approximately 1000 MW of installations—almost half the national total of 2100 MW. And other distributed generation customers (eg, commercial rooftops) account for about another 300 MW.
So for the first time in years, California’s share of new solar PV installation is now less than half the national total. Good news! The rest of the country is waking up to the benefits of solar energy with capacity increasing in numerous states. The Utility sector is leading this expansion, while the residential sector growth is accelerating. We’re pleased to see this expansion.