It looks like utilities are poised to drive the U.S. solar market in coming years, based on a new report from Emerging Energy Research that predicts utilities will add 21.5 GW of photovoltaic capacity by 2020, up from only 77 MW of utility-driven PV projects in operation today. The report released Thursday confirms the trend we noted back in October, and the projections are huge considering that the United States made up only 360 MW of demand last year, according to Solarbuzz.
U.S. utilities already have announced more than 4.8 GW of large PV projects in the works, according to the Emerging Energy Research report. The firm forecasts that utilities will play a key role in shaping the changing landscape of solar power and estimates the U.S. PV market – led by utility activity – will grow from 2 GW in 2011 to a whopping 12 GW in 2015. That compares to a worldwide solar market of 5.8 GW in 2008, according to Photon Consulting’s Solar Annual 2009. Photon projects the global PV market will reach 8.6 GW this year and 44.9 GW in 2011, meaning that the U.S. would make up more than a quarter of the world market in 2011 if Emerging Energy Research’s forecasts are on target, up from about 6 percent last year.
Unsurprisingly, Emerging Energy Research expects state renewable portfolio standards — which require utilities to get varying percentages of their electricity from renewable sources — to be the primary driver for the boost. California, for example, aims to get 33 percent of its electricity from renewables by 2020 (utilities are expected to miss the previous target of 20 percent by 2010). Municipal utility Los Angeles Department of Water and Power, as well as all three of the state’s investor-owned electric utilities — Pacific Gas & Electric, Southern California Edison and San Diego Gas & Electric — have announced PV initiatives. All together, those utility projects make up approximately 75 percent of the U.S. photovoltaic pipeline, according to the report.
Just because a project is planned doesn’t mean it will be completed, of course. The California Public Utilities Commission last year estimated that 35 percent of the contracts signed by publicly owned utilities since 2002, when the state’s renewable energy portfolio was established, have been canceled or delayed. In some cases, utilities attempting to boost their renewable portfolios have signed contracts for renewable electricity at prices too low for the projects to really be viable, said Jenny Chase, head of solar research at New Energy Research, in an interview this fall.
But the contract prices for these utility photovoltaic projects seem realistic so far, she said. “As far as I can tell, contracts are actually at prices that may be happening,” she said. “There could be bigger projects here than anywhere else.” The biggest PV plant today is 60 MW, in Spain, while U.S. utilities are planning projects of up to 250 MW.
Still, Emerging Energy Research found that cost remains a significant barrier. Even though solar-panel costs are falling fast, the cost of energy from PV remains far from competitive with conventional wholesale electricity prices, according to the report. The high cost makes PV “less compelling” that options such as wind, biomass and geothermal power for utilities in states with renewable standards that don’t require a certain portion of electricity to come specifically from solar, said Reese Tisdale, solar research director for Emerging Energy Research, in a press release.
Adding large amounts of PV into the grid also would raise some challenges around transmission and require the intermittent power from the sun to be smoothed out for the steady power required by electrical appliances. “You could get a bunch of lights going out in a nearby town if a cloud happened to pass over the solar panels all at once,” Chase said back in October. But if costs continue to fall, or if more states — or a federal standard — start requiring solar, utility demand could rise even higher than today’s already-bright forecast.
Photo credit PG&E