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Global PV Outlook: Up-And-Comers On The Move

Despite what it terms a slow start, IHS says a strong finish will help produce 46 GW of total newly installed photovoltaic power capacity this year. The market research firm predicts installations of just under 15 GW in the final quarter - a new record for the industry.

NPD Solarbuzz notes that the top five photovoltaic markets - China, the U.S., Japan, the U.K. and Germany - are forecast to account for almost 80% of the world market, a new high in terms of market consolidation. Nevertheless, those at the top of the slate are experiencing very different fortunes in their relative outlook for additional PV capacity in the future.

Michael Barker, a senior analyst for NDP Solarbuzz, says the rise of the Chinese and U.S. markets has been occurring steadily over the past few years. In the second half of this year, these two markets are set to account for 54% of the global market.

While China’s National Energy Administration (NEA) has lowered its installation target for this year from 14 GW to 13 GW, IHS reports that upcoming policy initiatives will help remove barriers for distributed generation (DG) solar. IHS notes that while ground-mount PV systems continue to dominate China’s solar market, with 8 GW of new capacity expected this year, DG installations are primed to accelerate rapidly due to a combination of market forces and government policy.

The U.S. is having a banner year, with the Solar Energy Industries Association projecting 6.6 GW of PV to be installed nationwide, up 39% over 2013. The U.S. Energy Information Agency forecasts that in the period between 2013 and 2040, 351 GW of new domestic electric generating capacity will be added. Of the 83 GW of renewable capacity additions foreseen, 39 GW will be PV systems - 60% of which will be rooftop installations.

The agency points out that solar power in the U.S. remains largely at the mercy of federal tax policies and state incentives. However, the effect of the U.S. Environmental Protection Agency’s proposed carbon emission rules cannot properly be calculated until their adoption - demand for solar may increase substantially beyond current estimates.

By contrast, the last few years have seen steadily declining demand shares in Europe. NPD Solarbuzz forecasts annual PV demand from Europe to reach 10 GW this year, down 7% from 2013. This will be the third consecutive year that European solar PV demand has declined, after reaching a peak of 19.2 GW in 2011. During this period, Europe’s contribution to global PV demand has fallen sharply from 70% in 2011 to 22% in 2014.

If the current top five are approaching or have already summited the apex of their PV installation trajectories, albeit with fairly gentle glide paths out to a reasonable time horizon, a new generation of potential solar powers are attracting investment and building project pipelines.

According to IHS, the next big opportunity for growth in the global solar business lies in small, emerging markets. Annual installations in these emerging countries are expected to increase to 10.9 GW in 2017, expanding at a compound annual growth rate of 38% from 2.2 GW in 2012. The emerging markets will account for 19% of global solar installations in 2017, up from just 7% in 2012, the report says.

Among the up-and-comers most often cited, South Africa, Turkey and Mexico currently rank highest on IHS’ emerging PV markets attractiveness index, which rates a country’s allure to prospective investors, developers and manufacturers. Countries are rated in four categories, including macroeconomic climate, potential market size, project profitability and pipeline maturity.

(For an in-depth examination of Turkey’s potential as a solar market, see “Solar Power In Turkey Takes Its First Steps On The World Stage.”)

 

Capital flowing

Mercom Capital Group LLC reports that total global corporate funding in the solar sector, including venture capital (VC), private equity, debt financing and public market financing raised by public companies came in at $6.3 billion in the second quarter of the year, compared to $7 billion in the first quarter.

“It was a solid quarter for the solar sector in terms of fundraising,” says Raj Prabhu, CEO of Mercom Capital Group. “VC funding was up, public markets remained strong, and we are seeing new and innovative financial structures. Residential/commercial solar funds continue to raise record amounts.”

Plentiful resources of renewables like solar and wind power - combined with a need for new, more economical power capacity - are fueling strong momentum in clean energy in Mexico and the six main countries of Central America, according to a new report from Bloomberg New Energy Finance (BNEF). In fact, Mexico is on track to set a new investment record this year.

BNEF’s analysis of the project pipeline suggests that Mexico and Central America are likely to install a modest 193 MW of solar power this year, but the figure is likely to leap to 355 MW in 2015 and 456 MW in 2016.

 

Rate Rules Could End Utility Battles Over Solar

Across the U.S., regulators and legislatures have been trying - and generally failing - to reconcile the conflicting demands of utilities and solar sector advocates over photovoltaic power. A group of analysts from the North Carolina State University’s Clean Energy Technology Center and Meister Consultants Group says too much energy is being spent on the wrong arguments.

A new report, prepared with the support of the U.S. Department of Energy’s SunShot Initiative, says the issue needs to move away from regional battles over net-energy metering and toward comprehensive, broadly acceptable principles for public utility rate design.

If that sounds like a tall order, Jim Kennerly, senior policy analyst at the N.C. Clean Energy Technology Center and lead author of the report, says a three-pronged strategy incorporating revenue decoupling, minimum monthly bills and time-of-use pricing will enable utilities to recover costs without imposing fees and other hardships on solar customers.

As Kennerly sees it, the main bone of contention between the utility and solar advocate camps over net metering is whether distributed PV is to be regarded as a cost or a benefit. Invariably, whether before public utility commissions (PUCs) or, interestingly, in the court of public opinion, utilities argue that rooftop solar shifts costs onto non-solar ratepayers, while PV advocates counter that utilities are failing to take the true value of solar into account.

Incorporating the value of solar, with its hard-to-quantify environmental benefits and infrastructure-deferring generation capacity close to the load, has been the most recent flank march staged by solar advocates. Earlier this year, the Minnesota PUC took a step toward quantifying the societal benefits of distributed generation solar power when it approved a standard methodology for calculating the value of solar (VOS) developed by the state’s Department of Commerce.

Nevertheless, other PUCs have since demonstrated that VOS considerations are a long way from becoming standard features of regulatory decisions.

“The risk of value of solar calculations is that some people will categorically disbelieve that certain benefits exist, and some will categorically disbelieve that some costs exist,” Kennerly says.

The N.C. Clean Energy Center/Meister report is an attempt to reconcile these interests - along with the interests of the solar sector to grow and thrive. The SunShot Initiative supports the effort as a means of reducing solar soft costs, which is beneficial for ratepayers and taxpayers alike. At the same time, the recommendations suggest a way utilities can shift toward getting the fixed-cost revenue they need while changing their role as time goes on.

As Kennerly envisions it, rate decoupling is the key mechanism by which utilities can recover their costs and serve their shareholders without placing barriers in the way of solar development. This essentially removes the sale of electricity as the primary driver of the utility’s revenue stream. Under the policy, a utility goes before the PUC with an explanation of how much money it wants to make based on its assets, rate base and other factors, such as how many customers it has and how much electricity those customers are using.

The expected and PUC-approved revenue amount is assured by means of the minimum bill, which enables utilities to collect distribution fees, even from solar customers who would otherwise zero-out their electric bills. According to the N.C./Meister report, PUC involvement through a revenue decoupling policy is essential for a minimum bill to remain reasonable and equitable.

The report’s third key recommendation, phasing in time-of-use electricity pricing, is designed to avoid the cost shifts that attend price averaging. Kennerly points out that most people use electricity at a flat rate that represents the average costs of serving them. Billing rates based on costs at the time of use would enable PV customers to avoid periods of peak usage while still paying their fair share for what they do use. - Michael Puttré

 

Xcel Energy Offers ‘Bridge’ For Colorado Solar

As part of its 2014 Renewable Energy Standard Plan, Public Service Co. of Colorado, an Xcel Energy subsidiary, filed a plan with the Colorado Public Service Commission (PUC) to add 36 MW of customer-sited solar capacity to its Solar*Rewards program.

Xcel’s Solar*Rewards offers customers incentives to install solar panels on their homes and businesses. The rebate program, which started in 2006, has helped to install more than 200 MW of capacity through 19,800 PV systems. The program has paid more than $297 million in incentives to Colorado customers.

Solar*Rewards provides incentives across three tiers: the small program (for installations of less than 10 kW), the medium program (more than 25 kW but less than 500 kW) and the large program (for installations exceeding 500 kW).

Since May 2013, Xcel Energy has been operating under a settlement that called for 33.6 MW of installed solar capacity. However, by June 2014, the capacity for the Solar*Rewards program had been exhausted.

“We’re looking at the options to keep the Solar*Rewards program open,” says Robin Kittel, director of regulatory administration for Xcel Energy. “In order to re-open the plan, we have agreed to advance a certain amount of capacity.”

Under the agreement, Xcel has agreed to advance 4 MW per month - capped at 20 MW - for the small program and 7 MW for the medium program.

Kittel says the agreement is intended to serve as a “bridge” until the PUC approves the utility’s 2014 plan that includes 24 MW of capacity for the small program and 12 MW of capacity for the medium program. Advancing capacity, she says, will keep pushing Colorado solar development forward. - Mark Del Franco

 

Yaskawa Buys Solectria Renewables

Solectria Renewables and Japan-based Yaskawa Electric Corp. have reached a definitive agreement whereby Yaskawa Electric will acquire Solectria through its U.S. subsidiary, Yaskawa America Inc. Under the deal, Solectria Renewables will continue to operate as a wholly owned subsidiary. Financial details were not disclosed.

Headquartered in Lawrence, Mass., Solectria Renewables makes PV inverters for residential, commercial and utility-scale power systems and employs over 170 people throughout the U.S. Meanwhile, Yaskawa Electric is a $3.6 billion global factory automation solutions company that has also established a position in the low-power PV inverter market in Japan.

The parties say the acquisition will benefit Yaskawa and Solectria customers alike.

 

CBD Energy Buys Into Thai Engineering Firm

Australia-based CBD Energy Ltd. (CBDE) entered into an agreement with Environmental Engineering Group Thailand (EEG) to acquire 30% of the company.

CBDE says the transaction will enable it to participate in EEG’s project pipeline of over 100 MW. EEG has a partnering agreement with the government-owned Provincial Electricity Authority’s renewable energy subsidiary PEA ENCOM. This pipeline is in addition to a previously announced agreement between CBDE and EEG to jointly develop 64 MW of solar projects in Thailand.

As part of the transaction, CBDE intends to grant EEG a sub-license to use the Westinghouse Solar brand in Thailand.

“We feel Thailand represents an incredible opportunity to capitalize on a rapidly developing market with growing power needs and blends well with projects we have under development in North America, Europe, the U.K. and Australia,” says Gerry McGowan, executive chairman of CBDE.

 

STR Sells Majority Stake To China’s Zhenfa Energy

China-based solar power developer Zhenfa Energy Group Co. Ltd. has taken a 51% stake in STR Holdings Inc., a Connecticut-based provider of encapsulants to the photovoltaic module industry. The deal is worth approximately $21.7 million.

The Zhenfa group of companies includes a privately held solar engineering, procurement and construction company that designs, installs, owns and operates utility-scale PV power plants primarily in China. Under terms of the agreement, Zhenfa will assist STR with its operations in China, including the following:

• Assistance with the marketing, sales and distribution of the company’s encapsulant products to Chinese solar module manufacturers;
• Providing the company with a manufacturing facility in China on favorable terms;
• Help with obtaining incentives, tax abatements or other tax benefits;
• Securing raw materials from Chinese suppliers favorable on terms and conditions; and
• Help with hiring, training and developing its workforce in China.

The transaction is expected to close during the fourth quarter of this year, pending regulatory and stockholder approvals.

 

Yingli Opens Office
In Chile

Yingli Green Energy Holding Co. Ltd. has opened an office in Santiago, Chile. Robert Muhn will serve as managing director of Yingli Green Energy Chile.

The new office is the company’s third in Latin America, joining existing locations in Mexico City and Sao Paolo, Brazil. Yingli says it has already supplied more than 25 MW of its solar modules to projects in Chile.

“While we see tremendous growth potential in Chile’s utility-scale market, we also anticipate that the country’s relatively high electricity prices and strong solar resources will provide a foundation for a thriving and sustainable distributed generation market in the future,” Muhn says.

Yingli Green Energy says the South and Central American solar energy markets are a major strategic priority in its long-term global development plans. Chile, in particular, is widely seen as a promising region for solar development.

 

Suntech Invests $25M
In Storage

Oregon-based Powin Energy Corp. has secured an investment of $25 million from SF Suntech Inc., a wholly owned subsidiary of China-based Shunfeng Photovoltaic International Ltd.

Powin Energy is developing scalable energy storage technologies for grid-level, commercial and transportation applications.

Under the terms of the investment agreement, $5.2 million of the funds will be used to pay off a loan owing to its parent company, Powin Corp. The balance will be used by Powin Energy for working capital and other purposes.

 

Non-Hydro Renewables On Top In U.S.

According to the U.S. Energy Information Agency (EIA), April marked the eighth consecutive month that the nation’s total monthly non-hydro renewable generation exceeded hydropower generation.

The recent growth in wind and solar, which reflects policies such as state renewable portfolio standards and federal tax credits as well as declining costs of technology, has been the primary driver in the increasing market share of non-hydro renewable generation, the EIA says.

October 2012 was the first month on record in which non-hydro renewable generation exceeded hydropower generation, although significant month-to-month variation kept the trend lines crossing back and forth. The most recent ascent of non-hydro renewables, lasting from September 2013 through April 2014, has been the most enduring.

The data used to develop the EIA’s trends analysis includes only generation from plants whose capacity exceeds 1 MW and, as a result, does not include generation from most distributed generation (DG) solar PV capacity. Inclusion of DG solar, which the EIA estimates at roughly 10 billion kWh hours in 2013, modestly accelerates the timing of the crossover between hydro and non-hydro renewable generation.

The EIA projects that 2014 will be the first year in which annual non-hydro renewable generation surpasses annual hydropower generation. By 2040, non-hydro renewables are projected to provide more than twice as much generation as hydropower.

 

Ground-Mount Demand Surges In U.S. PV Market

According to analysis from NPD Solarbuzz, ground-mount solar photovoltaic installations have outpaced building-mount installations in the U.S. by a significant margin over the last several years in all but a few quarters.

A key factor behind the growth of the ground-mount segment is the continued development of large-scale utility projects, NPD Solarbuzz says.

Recent data in the company’s U.S. deal tracker highlights a new trend where projects previously designed as building-mounts have shifted to ground-mounted carport structures.

The continued attractiveness of these projects is expected to result in strong growth in the ground-mount segment through the rest of 2014, NPD Solarbuzz forecasts.

However, according to Michael Barker, senior analyst, risks remain in the U.S. market, particularly for the ground-mount segment.

One of the main risks is increased installed system prices due to tariffs imposed on Chinese modules. Many of the large-scale ground-mount projects have bid power purchase agreement contracts at very aggressive rates and are particularly susceptible to price pressure, Barker says.

 

Clean Edge Ranks Utilities On Cleantech

Many utilities are deploying lower carbon fuel sources, with state policies a key driver in that performance. So says a new report co-produced by Boston-based advocacy group Ceres and San Francisco-based market research firm Clean Edge. However, there is variability in performance even among utilities operating in the same states.

Five of the 32 companies included in the report accounted for nearly 54% of renewable energy sales.

According to the report, which ranks the 32 largest electric utility holding companies - representing about 68% of U.S. retail electricity sales in 2012 - NV Energy, Xcel, Pacific Gas and Electric (PG&E), Sempra and Edison International were found to rank the highest for renewable energy sales, with renewable resources accounting for about 17% to 21% of their retail electricity sales in 2012.

Southern Co., SCANA, Dominion, AES and Entergy ranked at the bottom, with renewable energy sales accounting for less than 2% of each company’s total power sales. R