Can the US Lead the Global Solar Market?
The Big Question at Hand: Can the US Lead the Global Solar Market?
How does the US compare to the global market?
Historically, the US has been a big player in terms of the global solar industry. From 2005-2011, the US market oscillated somewhere between 5-7% of global installation in any given year. Solar installations in the country doubled in 2010 and came close to doubling again in 2011. But what was really happening is that the US market was growing in tandem with the global market at basically the same pace in any given year. As a result, the US always stood in 3rd, 4th or 5th place—behind Germany or sometimes Italy, Spain, Japan or China (more recently).
The US market has been interesting from a certain perspective, but it certainly hasn't been driving the global market. Now we're heading into a position where we can change that relatively quickly. Although 2012 did not see the same growth as the past couple years, there's an expectation that the European markets will be shrinking, while China, India, the US and others keep growing. So while we can expect the global market to slow down a bit, the US market, in contrast, is just getting started.
When will the US head the solar market?
In a tariff-imposed post-1603 world, we can't expect to see monumental growth the same as we have in the past. However, 50-75 percent growth is entirely likely—meaning the US market will grow faster than the global market, and thus, gain more share... In the next 3-4 years, the US will be one of the leaders—if not the leader—in installations. Our assessment [at GTM Research] is come 2015 or 2016, the US will either be in 1st or 2nd place, depending on what happens with China.
In short, the US market matters. Two years ago, many solar power companies started turning their eye towards the US for new opportunities, and started realizing the US market is a lot different than the Italian or German markets when they were booming. The US market is a different beast. It's driven entirely separately in 50 different states in three different market segments in 3,000 utility territories. The US is complicated—especially financing, because we have tax equity here which doesn't exist anywhere else. It's not easy to play here.
Last five months of ups and downs...
Additionally, the last 5 months in the US solar market have been the most tumultuous we've ever seen... We are in a new world now, and need to figure out how to deal with it.
There were six major acquisitions each year over the last three years, and that won't slow down anytime soon. Half of the developers we see today won't be around in their current form in two more years.
Where do we stand now?
As far as PV and CPV goes, we have just over 1 GW operating in total, but over 9 GW of projects currently have PPAs signed by utilities throughout the US that have not yet been completed. The vast majority of those are expected to be completed in the next four years and about 3 GW of those projects are currently under construction. Another 6 GW are waiting to get financed. These numbers, however, exclude any other projects that will get PPAs signed over the next few years. Some 32 GW worth of projects are still seeking permits, PPAs and financing.
Nonetheless, the pipeline in the US is gigantic and that's why there's so much interest in this market. There's so much potential, considering that only 1 GW has been installed.
That may not seem like a lot, but we've actually come a long way. In 2009, there were only two projects in the US over 10 MW; in 2010, there were 8; and in 2011, there were 24. Although it's a crowded market, the US is successfully completing and financing projects and more are expected in the coming year.
Basically, what we've done in the US to date is installed one big solar plant worth of solar power. That means that we have a long way to go before solar is a meaningful proportion of the electricity portfolio in the US—it also means that the market potential is virtually limitless by current standards.
In the Public Eye: Solyndra as an opportunity
Without a doubt, solar is suddenly very much in the public eye and all over the media, which is both a curse and a blessing. People are interested and it's an exciting new market, which helps bring along financing. However, when a Solyndra pops up, the whole industry looks bad.
Solyndra isn't going away and that's something we have to acknowledge... Some of the first ads for the general election—on both sides of the Obama administration—have related either directly or indirectly to Solyndra, and it will continue to be a contentious topic in the political sphere.
But despite the fact that Solyndra looked bad, the solar industry is booming in the US. In terms of solar installations alone, the US grew over 100 percent in 2010, around 90% in 2011 and is expected to grow another 50-75 percent this year, depending on what happens with the import tariff with China and 1603. This is an opportunity for us to prove that solar will scale up over the next few years, as it's certainly a technology that's not going anywhere.
Building up a massive pipeline
Expect to start seeing enormous growth in the pipeline that's been financed for utility-scale solar power. Though 50-75 percent growth is projected for overall installations, the utility market will grow by a minimum of 100 percent. That will also belie the turmoil occurring underneath in regards to developers trying to figure out how they can get these pipelines in place, build them out, deal with financing, tax equities, etc..
More to come on these topics and more as Energy Digital continues to cover this event...
SEE OTHER TOP STORIES IN THE ENERGY DIGITAL CONTENT NETWORK
UK must stop blundering into high carbon choices warns CCC
The UK Government must end a year of climate contradictions and stop blundering on high carbon choices, according to the Climate Change Committee as it released 200 policy recommendations in a progress to Parliament update.
While the rigour of the Climate Change Act helped bring COP26 to the UK, it is not enough for Ministers to point to the Glasgow summit and hope that this will carry the day with the public, the Committee warns. Leadership is required, detail on the steps the UK will take in the coming years, clarity on tax changes and public spending commitments, as well as active engagement with people and businesses across the country.
"It it is hard to discern any comprehensive strategy in the climate plans we have seen in the last 12 months. There are gaps and ambiguities. Climate resilience remains a second-order issue, if it is considered at all. We continue to blunder into high-carbon choices. Our Planning system and other fundamental structures have not been recast to meet our legal and international climate commitments," the update states. "Our message to Government is simple: act quickly – be bold and decisive."
The UK’s record to date is strong in parts, but it has fallen behind on adapting to the changing climate and not yet provided a coherent plan to reduce emissions in the critical decade ahead, according to the Committee.
- Statutory framework for climate The UK has a strong climate framework under the Climate Change Act (2008), with legally-binding emissions targets, a process to integrate climate risks into policy, and a central role for independent evidence-based advice and monitoring. This model has inspired similarclimate legislation across the world.
- Emissions targets The UK has adopted ambitious territorial emissions targets aligned to the Paris Agreement: the Sixth Carbon Budget requires an emissions reduction of 63% from 2019 to 2035, on the way to Net Zero by 2050. These are comprehensive targets covering all greenhouse gases and all sectors, including international aviation and shipping.
- Emissions reduction The UK has a leading record in reducing its own emissions: down by 40% from 1990 to 2019, the largest reduction in the G20, while growing the economy (GDP increased by 78% from 1990 to 2019). The rate of reductions since 2012 (of around 20 MtCO2e annually) is comparable to that needed in the future.
- Climate Risk and Adaptation The UK has undertaken three comprehensive assessments of the climate risks it faces, and the Government has published plans for adapting to those risks. There have been some actions in response, notably in tackling flooding and water scarcity, but overall progress in planning and delivering adaptation is not keeping up with increasing risk. The UK is less prepared for the changing climate now than it was when the previous risk assessment was published five years ago.
- Climate finance The UK has been a strong contributor to international climate finance, having recently doubled its commitment to £11.6 billion in aggregate over 2021/22 to 2025/26. This spend is split between support for cutting emissions and support for adaptation, which is important given significant underfunding of adaptation globally. However, recent cuts to the UK’s overseas aid are undermining these commitments.
In a separate comment, it said the Prime Minister’s Ten-Point Plan was an important statement of ambition, but it has yet to be backed with firm policies.
Baroness Brown, Chair of the Adaptation Committee said: “The UK is leading in diagnosis but lagging in policy and action. This cannot be put off further. We cannot deliver Net Zero without serious action on adaptation. We need action now, followed by a National Adaptation Programme that must be more ambitious; more comprehensive; and better focussed on implementation than its predecessors, to improve national resilience to climate change.”
Priority recommendations for 2021 include setting out capacity and usage requirements for Energy from Waste consistent with plans to improve recycling and waste prevention, and issue guidance to align local authority waste contracts and planning policy to these targets; develop (with DIT) the option of applying either border carbon tariffs or minimum standards to imports of selected embedded-emission-intense industrial and agricultural products and fuels; and implement a public engagement programme about national adaptation objectives, acceptable levels of risk, desired resilience standards, how to address inequalities, and responsibilities across society.
Drax Group CEO Will Gardiner said the report is another reminder that if the UK is to meet its ambitious climate targets there is an urgent need to scale up bioenergy with carbon capture and storage (BECCS).
"As the world’s leading generator and supplier of sustainable bioenergy there is no better place to deliver BECCS at scale than at Drax in the UK. We are ready to invest in and deliver this world-leading green technology, which would support clean growth in the north of England, create tens of thousands of jobs and put the UK at the forefront of combatting climate change."
Drax Group is kickstarting the planning process to build a new underground pumped hydro storage power station – more than doubling the electricity generating capacity at its iconic Cruachan facility in Scotland. The 600MW power station will be located inside Ben Cruachan – Argyll’s highest mountain – and increase the site’s total capacity to 1.04GW (click here).
Lockdown measures led to a record decrease in UK emissions in 2020 of 13% from the previous year. The largest falls were in aviation (-60%), shipping (-24%) and surface transport (-18%). While some of this change could persist (e.g. business travellers accounted for 15-25% of UK air passengers before the pandemic), much is already rebounding with HGV and van travel back to pre-pandemic levels, while car use, which at one point was down by two-thirds, only 20% below pre-pandemic levels.