Although the solar photovoltaic (PV) industry was expected to consist mainly of solar farms/utility scale installations, the industry is seeing a rise in distributed solar. Distributed solar refers to electricity that can be produced at or close to the place where it is used. Distributed solar has the potential to offset the demand of peak electricity in addition to helping stabilize the local grid.
The changing solar market and the progression from solar photovoltaic (PV) utility installations to distributed solar PV installations can be attributed to the lower cost of PV panels, advances in technology, and the development of effective residential and commercial financing models. Statistics show that in 2012, annual distributed solar systems accounted for about 69% of all solar PV systems worldwide. In North America, mainly in the United States, distributed solar grew 42%. Worldwide, distributed solar PV installations are projected to generate around $540.3 billion in revenue from 2013 to 2018.
The United States is striving to reach grid parity, which occurs when energy from the PV solar panels can generate electricity at a cost that is less than or equal to the price of purchasing power from the electricity grid without the use of government incentives. Reaching grid parity will be significant for the solar PV industry, especially for distributed solar because it will allow for solar power to become a competitor for widespread development without the help from government subsidies.
Long regarded as a leader in sustainable energy, California continues its ascent to the top of the renewable energy market with the help of solar financing solutions. According to grid operator California ISO (Cal-ISO), a record-breaking 2,071 megawatts (MW) of solar electricity were produced last Friday, which totaled 5% of the afternoon’s peak demand. State officials report that the output more than doubled the state’s previous record of 1,000 MW set in September, 2012.
A recent report published by The Energy Collective, an independent think tank, revealed that solar power will account for a staggering 97 percent of all new electricity generation slated for the second half of 2013. And, if “shared renewables” legislation moves forward, more than 75 percent of utility customers will benefit from new solar projects statewide, according to the report.
“We are excited by this trend and expect to hit more record peaks on a regular basis,” said Steve Berberich, Cal-ISO President and CEO. “We have more solar facilities that are connected to the grid, and just like any renewable resource on that particular day and on that particular time, we had quality sunshine that we were able to convert into electricity.”
The Solar Energy Industries Association (SEIA) ranked California first in solar production nationwide, with the ability to generate enough power to sustain more than 600,000 households. SEIA reports ranked California’s photovoltaic capacity as the seventh most powerful on a global scale.
The state-funded California Solar Initiative (CSI) is projected to install an additional 1,940 MW of solar capacity by the end of 2016, and the state’s expanding cap-and-trade system is expected to generate new funding for low-carbon energy sources. Renewable energy is likely to remain at the forefront of state legislation as elected officials lobby on behalf of solar power financing as a key component to the state’s economic vitality.
The United States Senate recently showed its support for renewable energy and the importance of its storage, through signing the Storage Technology for Renewable and Green Energy Act of 2013.
This Act promotes the implementation of energy storage technology in order to reduce the need for high-cost peaking electricity, while helping renewable energy become more reliable and available. This act is valuable to the solar industry because the bill includes a provision for third party financing to help make solar panels a more valuable resource.
The Act offers investment tax credits for three categories of energy storage facilities that temporarily store energy for use at another time. The first category provides a 20% tax credit of up to $40 million per project for storage systems connected to the electric grid as well as the distribution systems. Under the second category, there is a 30% investment tax credit of up to $1 million per project for businesses who implement on site storage. Lastly, the act includes a 30% tax credit for homeowners who invest in an on-site storage technology that has the ability to store off peak electricity.
In comparison to the Storage Act of 2011, the 2013 Act includes more emphasis toward small businesses with only 5kWh needed for storage systems rather than the 20kWh needed in 2011. Energy storage systems are a valuable resource for the electric grid because they increase grid efficiency, allow for the use of more renewable energy and help eliminate the need for new transmission lines.
The New Jersey Board of Public Utilities recently extended a key solar financing and installation program. The solar program was implemented by Public Service Electric & Gas, the state’s largest utility company. The goal of the solar financing and installation program is to increase the amount of clean, carbon free energy, create jobs, and drive economic development while helping make New Jersey the leading state for solar power.
The extension of this program is important for municipal, non-profit and commercial buildings looking to save on energy expenses, while utilizing a solar array. The extension of the “Solar 4 All” program will finance 3 megawatts (MW) of solar installations. These 3MWs can be utilized by municipal, non-profit, and commercial buildings and financed through a lease or power purchase agreement (PPA).The solar financing option of a PPA can be beneficial because it allows for the option of a fixed term ranging from 10-20 years, and no upfront costs or worry about the maintenance and monitoring of the solar array.
Although the state is behind California and Arizona for total solar installations, New Jersey was able to install 414.9 MW of solar power this past calendar year. With the support from the state’s legislation and programs like “Solar 4 All”, New Jersey hopes to reach their commitment to have 20% of the state’s energy come from renewable sources like solar by 2020.
The United States solar market is scheduled to install around 4.3 gigawatts (GW) this year, which is a 20% increase from 2012, according to a report done by NPD Solarbuzz. The large amount of solar set to be installed in the US is in largely due to state mandates that are requiring solar to meet target levels of total energy production.
The report indicates that in 2014, photovoltaic (PV) installations are set to exceed 5GW, which will consist mainly of utility-scale projects. A large portion of these utility-scale projects will be comprised of PV power plants.
According to statistics in the report, solar demand in the second quarter of 2013 is anticipated to reach as much as 1GW. Over 70% of the forecasted 1GW will be coming from the states of California, Arizona, New Jersey, and North Carolina. The 1GW is estimated to have 14% coming from large commercial rooftops, 18% from residential PV installations, and 68% coming from utility-scale ground-mounted PV installations. The rise in PV installations on residential and commercial properties is in part due to the availability of solar financing options which include Power Purchase Agreements (PPA) and Leasing options. These two solar financing options allow energy consumers interested in solar, to put little to zero money down for a solar array.
Statistics predict that during the second half of 2013, utility-scale projects in California, Arizona, New Mexico and Texas will push US solar demand above 2.5GWs. The states of Hawaii, Massachusetts, Nevada, Ohio, North Carolina, and New York are expected to contribute significantly to solar PV installations in the US.