Solar PV and CPV Technology’s Market Trends

Written by Michael Vargas    Friday, 03 December 2010 15:00  

Despite the global financial crisis in 2009, the United States became the second largest photovoltaic (PV) solar energy market in the world, second only to Germany. This growth is credited mainly to the supportive policy implemented by both federal and state governments, particularly the Renewable Energy stimulus package as well as guaranteed financial incentives for the next eight years as introduced by the Obama administration.This unprecedented growth in the US solar PV market also is attributed to the tremendous growth of the market in California, which accounted for more than 70% of the country’s solar PV installations. The California solar PV market got its boost from strong policies implemented by the state government that heavily favored the solar energy industry, as well as statewide campaigns that encouraged use of solar power within the state.The solar PV market is expected to grow much more rapidly in the coming years and will be considered the most cost-effective way of generating electricity. The market would eventually boom as more and more people realize that the advantages they can gain with solar energy are built into the upfront cost they invest for solar PV installations and would be more cost competitive and economical than conventional energy technologies. Recent Updates on California’s Solar PV Market The solar PV market accounted for 677 MW in 2008, with California accounting for 468 MW from the total. To compete with more conventional energy technologies, the state of California made a major step in signing SB 32 into law in 2009, directing the California Public Utilities Commission to approve standard contracts based on wholesale energy prices for renewable energy resources. Contract prices also take into account inclusive benefits from renewable energy such as reduced carbon emissions, fewer transmission lines and other infrastructure requirements, and generation of electricity during peak hours. Solar Panel Installation This decisive action by the state aims to take advantage of its solar energy resources as a major step in addressing the state’s energy challenges, thereby creating a market that favors the development of solar energy technologies. Now, the California solar PV market is the largest in the United States and has attracted a host of PV vendors to cater to it. Existing energy utility companies in California also are jumping into the bandwagon by initiating programs developing their own large-scale solar PV power plants. The Solar Electric Power Association or SEPA is seeing a considerable number of energy utility companies starting their own solar business models, and they have already tracked at least 1500 MW in solar PV initiatives across the country – with the California market going strong at the helm Upcoming Trends and Market Outlook Now that the United States is second in the solar PV market, experts see a potential growth of up to 50% annually for the country, which will put it at the top spot in less than a decade. Indicators are strong that the market will no longer be needing government aid and will eventually stand on its own feet – as marked by a strong growth potential and an unprecedented market in the coming years. California will play a big role in this market and is considered the leading indicator from which other states would follow suit. It is projected that within three years, the solar PV market in California will grow to full maturity and eventually will generate cheaper electricity from what is generated from the Grid. At this stage, the California PV market is just a tenth of Germany’s large solar PV market, but in the next four years the market is expected to leapfrog from its current concentration on the residential market and into the commercial sector where the big players – and energy spenders – are. Game Changing PV Technology The popularity of PV or photovoltaic solar panels make them quite familiar terms with the general populace, particularly in California. Some may also be familiar with solar thermal systems that make use of solar energy to create heat to generate power through turbines. However, many still do not see solar energy as viable alternatives to produce electricity due to high start-up costs and other issues related to the manufacture and use of photovoltaic panels. A new technology is emerging that will change all that. Called concentrated or concentrating photovoltaic (CPV) technology, the system makes use of lenses or mirrors to concentrate solar energy onto tiny solar cells that are highly efficient in converting solar energy into electricity. Such arrangement is meant to address the number one problem with the use of solar PV systems – the expensive silicon-based solar panel. Although many journals have already reported significant claims on how effective this technology is on a laboratory setting, the challenge remains on whether this technology will be viable in the commercial market. Several companies have taken up this challenge and are now making significant headway by bringing CPV panels out into the market. Understanding Concentrated Photovoltaic Technologies and Its Benefits Concentrated Photovoltaics As mentioned earlier, the difference in CPV technologies with traditional solar PV cells is on the way sunlight is concentrated, up to 650 times onto high performance solar cells. This will increase the generated electricity, which can be maximized further by the use of tracking systems where the CPV panels can be mounted. CPV panel efficiency considers the panels as a whole and is much lower than cell efficiency. Efficient CPV panels can reach 25%, which is typically twice the efficiency of traditional PV cells. As this efficiency increases the cost for harnessing solar energy decreases, resulting in fewer raw materials required, lower manufacturing costs, and reduced land utilization. The following discusses some of the additional benefits that can be realized with the use of concentrated photovoltaic solar panel technologies:  Dual Land Use: CPV panels are mounted on elevated tracking systems that can allow utilization of the land underneath for planting crops.  95% Recyclable: unlike traditional PV panels, CPVs use glass and aluminum as their two main materials, which can then be recycled. Useful life of solar panels is typically 30 years. ROI in six+ months: early technologies used to manufacture solar panels require as much energy as they can produce over a 20-year period, resulting to poor net energy gain. These new CPVs are much more efficient in that users can realize payback within a short period of six months. Similarity to the Auto Industry:  The manufacture of CPV panels makes use of automated manufacturing systems similar to the very stringent auto industry. This manufacturability makes it more cost-effective than traditional solar panels. California Companies Engaged in Developing Concentrated Photovoltaic Technologies In California, several young or start-up companies are making waves in the development of concentrated photovoltaic technologies. These companies include but are not limited to: SolFocus: This company is based in Mountain View, California, and has raised $95 million in required funds that will be used for the deployment of its CPV systems for commercial use.  GreenVolts: Based in San Francisco, GreenVolts is now selling a concentrated PV system mounted on a sun-tracking mechanism, enabling it to increase sunlight concentration of up to 625 times, producing energy at half the cost of traditional photovoltaic cells. Silicon Valley Soar: This company markets a flat plate internal concentrator for their CPVs, delivering twice the concentration while reducing 50% of the silicon usage requirements. Unlike other systems, this unit does not require a tracking system. This reduces the number for moving parts, which further reduces the cost. Amonix: This company is a veteran in high concentration PV systems and has now received venture capital investments of up to $129 million to hasten utility-scale deployment of its products to commercial and residential use. Pyron Solar: This company based in San Diego now has a 6.6 KW prototype that floats in water as a cooling system to prevent panel damage. Recent Developments in Concentrated Photovoltaic Technologies This year, 2010, is when the Federal Bureau of Land Management has given its go signal for several giant solar energy projects in California that literally will make the state’s deserts bloom with glass panels, steel blocks, and giant turbines to generate electricity harnessed from the sun. Many of these projects will make use of CPV systems to capture and concentrate solar energy. Last May, the Victor Valley College and the company SolFocus completed the largest solar power plant in North America utilizing concentrated photovoltaic technologies. The power plant has a capacity of one megawatt, which is more than enough to provide Victor Valley College with clean and renewable energy. Not only will this plant generate significant amounts of energy without significant impacts on land and water, it also can generate green jobs and be used as training facilities for future solar energy professionals – ensuring a bright future for all. Conclusion With the emergence of the PV markets in California and throughout the United States, the communities in which these projects are implemented are on a path towards receiving long‐term community service and benefit. Public policy relating to environment and economic development can be the major benefactors of these projects. Never has the time for innovation and expansion been greater in our renewable energy history. About the Author Michael Vargas is the founder and principal consultant of Atlas Project Support. Mr. Vargas has more than 10 years of construction and energy accounting and utilization experience, and is a Certified Business Energy Professional through the AEE, a California Energy Commission Certified Energy Plans Examiner, LEED Green Associate and GBCI Advisory Panel Member.  . Mr. Vargas also holds a BSBA from SDSU, MBA and MPM from Keller Graduate School and is currently pursuing his Doctorate of Business Administration at Alliant International.  For more information contact Michael at mvargas@myatlasproject.com or via the web at www.myatlasproject.com

Cleantech & Lame Duck Session

2011 Global Solar Demand to Hit 17 GW, 20.3 GW in 2012

By Ardour Capital | 07 December 2010, 11:41 BST (http://uk.ibtimes.com/articles/20101207/2011-global-solar-demand-hit-20gw-2012.htm)

 

The US Congress is in a heated lame duck session before Republicans take control of the House in 2011 – various cleantech subsidies are at risk.

Major provisions include an expansion of the Treasury grant program for downstream renewable electricity projects, a $2.5 billion expansion of the Renewable Energy Manufacturer’s Tax Credit (MTC), and tax credit extensions for various biofuels.

Cleantech lobbyists are hoping to attach tax credit extensions to larger bills related to federal income tax rates. A proposal has surfaced in the Senate to extend key cleantech subsidies, but many hurdles remain before a bill reaches President Obama’s desk.

On December 1, the House Select Committee on Energy Independence and Global Warming announced it will no longer exist when the next congressional session begins. The committee, which was established by Democrats in 2007 to study energy and climate issues, held over 50 sessions regarding environmental legislation.

Also on December 1, Secretary of the Interior, Ken Salazar, announced that the Atlantic Coast and eastern Gulf of Mexico will be excluded from 2012-2017 off-shore exploration plans. The western and central Gulf of Mexico, the Cook Inlet, and the Chukchi and Beaufort Seas in the Arctic remain areas for potential leasing before 2017.

Global Solar Demand in 2011

Based on solar installations year-to-date and changes to feed-in tariff (FIT) programs made or announced in the major PV markets, we are raising our estimates for 2010 and 2011. We believe global demand will continue to grow steadily in 2011, but well below the pace of 2010. Germany will still be the main player, but several countries (such as Italy, the US, and Japan) will be gigawatt markets next year.

• We increase our 2011 global installation forecast to 17 GW, and introduce our 2012 estimate of 20.3 GW.
• Europe is on track to double installations in 2010; demand should be flat in 2011.
• The North American market will more than double in 2011.
• Geographic diversification will come from Asia and several new markets.
• Given our 2011 growth projections and compelling valuations, we see attractive entry points for these solar stocks: First Solar (NASDAQ: FSLR), Trina Solar (NYSE: TSL), Power-One (NASDAQ: PWER) and Satcon (NASDAQ: SATC).

We believe the PV market will be up ~22% in 2011 (not nearly the 92% expected in 2010), and estimate 17 GW in global demand.

Volatility will likely be high over the next few months as several European countries revise subsidy programs. We expect demand from Europe to be flattish next year (10,400 MW vs 10,850 MW in 2010), while North America (2,400 MW) and all other markets (4,200 MW) should more than double 2010 estimates (1,100 MW and 1,950 MW, respectively). We believe similar growth will be sustained in 2012, and estimate a total of 20.3 GW to be installed, up ~19% on an annual basis.

Solar 2011

Europe is on track to double installations in 2010, and we expect demand to remain flat in 2011. Most key European countries have announced or made cuts to their FIT; however, due to lower prices and demand elasticity, we expect the European market to remain at the same level as in 2010.

Declines in Germany (still the world’s main market) and the Czech Republic (expected to slash both tariffs and size of the installations that can apply for them), will be offset by growing markets, such as Italy (a lucrative market, with plenty of annual sun-hours). Further growth, on a smaller scale, will come from France (which just announced a potential freeze on new projects), UK, Greece, and Bulgaria. Spain decided not to retroactively cut its 2008 tariffs, but a cap of ~500 MW/yr continues to curb this market.

We see the North American market more than doubling in 2011. We estimate the US market will double in 2010 to 900 MW, and expect similar growth in 2011, with 1,750 MW likely to be installed.

We handicap the extension of the cash grant at ~50%, but see a growing group of tax equity investors to support 2011 growth. The Canadian province of Ontario is promoting the solar market with some of the most generous tariffs worldwide; we forecast its market to grow from an estimated 200 MW in 2010 to 650 MW next year.

Geographic diversification will likely come from Asia and several new markets. We expect the PV market in Asia to grow significantly compared to 2010. Japan will continue to grow supported by a FIT. As for China, despite a delay in establishing a national solar FIT program, installations will more than double 2010 estimates because of local pilot programs. China will ramp its domestic market as European growth slows and installed system prices decline.

Other growth will come primarily from India and South Korea, as well as Australia, Africa, and the Middle East.

Solar Country Totals 2011

Solar Global Growth 2011

Germany

Germany’s tariffs are active through the end of 2010. The cut to the 2011 FIT depends on the megawatts installed from June-September 2010. During that time, Germany installed an estimated 3,628 MW, leading to a 13% cut. IRRs ranged in the mid to high single digits, and will likely settle in the mid single digit range after the 2011 cut.

We expect a strong fourth quarter as installers and investors rush to lock in the 2010 tariffs. Since two other cuts this year have already been absorbed by the market, and there will be some tight supply, we believe Q42010 won’t be as strong as Q42009.

We are increasing our full year 2010 estimate for Germany to 7,200 MW. Based on conversations with local contacts and on the fact that potential cuts to the 2012 program could be larger than those in 2011, we are also boosting our 2011 estimate.

For next year, we still see Germany leading the global market, and anticipate 6,000 MW to be installed.

Italy

The current FIT program is active through the end of the year. Developers have until December 31, 2010 to complete installations, and until June 30, 2011 to connect to the grid, allowing sufficient time to deal with complex Italian bureaucracy.

We forecast a strong fourth quarter in Italy, sustained by a mild climate, and raise our 2010 estimate to 1,600 MW.

Starting January 1, 2011, the tariffs will be adjusted every four months. Despite subsidy declines, IRRs remain very attractive in the mid to high teens. In 2012-2013, tariffs will decline 6% a year, but we believe the program will still drive investment.

The cap for traditional PV, for 2011-13, is 3,000 MW and once reached a 14-month grace period begins to allow developers to complete installations. The 2011-13 program also includes special annual rates and separate caps for innovative BIPV and concentrated PV; cuts to these rates will be 2% per year in 2012 and 2013.

We believe part of the solar demand from declining markets will shift to Italy, and our estimate for 2011 is 2,000 MW.

France

Despite September 1 tariff cuts, France still has some of the most attractive programs. IRRs range from 15-20% (depending on sun hours), driving significant investment. However, the news related to a potential temporary freeze on new projects and a new regulatory framework starting March 2011 will affect the market growth.

The French Government seems to favor small, rooftop installations, which would not be affected by the freeze. Hence, we expect a large number of small residential installations. Our estimates are 500 MW in 2010 and 600 MW in 2011.

The tariffs are adjusted annually for inflation, and France has a soft cap of 1,500 sun-hour/yr for which installers will get paid full price; over that limit the electricity generated is only paid €0.05/kWh.

Spain

Spain’s government recently concluded investigations on potential fraud connected to 2008 tariffs, and decided not to make retroactive cuts for existing installations. This decision will help installers regain confidence in the Spanish market, and estimate 250 MW in new installations in 2010.

In 2011, new tariffs and caps will be enforced. Cuts seem to favor small rooftops installations (5% cut) over ground mounted solar parks (45% cut). Considering the amount of sun-hour/yr in Spain and that tariffs are paid for 25 years, the new FIT program can still be considered positive. In 2011, tariffs and caps will be adjusted quarterly, based on demand in the previous quarter; we estimate the Spanish PV market at 450 MW.

Czech Republic

Czech Republic has extremely generous tariffs valid throughout 2010, and we estimate 800 MW will be installed by the end of the year.

However, the government is taking a drastic step back because of concerns for grid instability and the impact of PV subsidies on consumers’ electricity bills. It cut tariffs by up to ~50% for the first two months of 2011, and starting March, only rooftop installations smaller than 30 kW will be subsidized. A final decision, including the actual tariffs paid, will be made soon.

Tariffs will be adjusted annually for inflation, between 2-4%, and installers can opt to receive in lieu of the tariff the retail price of electricity plus a bonus. Given the cuts and uncertainty of the Czech market our estimate for 2011 is 300 MW of new PV installations.

Ontario, Canada

Ontario offers some of the highest PV tariffs in the world. We forecast 200 MW will be installed in 2010, and 650 MW in 2011.

The program, which was amended over the summer, is expected to be revised every two years, and has a limit of 10 MW installed capacity for a single solar park. Ontario is also using the program to support the local solar industry. In fact, in 2010, 40% of domestic goods and services must be used for installations ≤ 10 kW, and 50% for installations larger than 10 kW. In 2011, both limits will be increased to 60%.

Japan claims these requirements disregard the World Trade Organization’s (WTO) rules against discrimination of products made overseas, and formally started a dispute with Canada and requested WTO consultation.

Japan

The Japanese solar market has recently been revitalized by several subsidy programs, after many years of flattish demand.

PV installers can qualify for government subsidies of ¥70,000/kW (~$850/kW) for residential installations up to 10 kW, and receive 33-50% capital expenditures for all other installations. Several tax credits and other local subsidies are also in force. Japan also has a 10-year FIT system that mandates electric companies buy only the excess electricity produced at a price that will be adjusted annually. These tariffs are expected to be valid at least until March 2011. For installations larger than 500 kW, the purchase price is negotiated between solar installers and power companies.

Due to these generous subsidy programs, we believe Japan will be able to install 1,000 MW in 2010, and grow to 1,600 MW next year.

United States

On the federal level, the US solar market is largely driven by the Investment Tax Credit (ITC), which is equal to 30% of capital expenditures for a solar installation. The tax credit doesn’t have a cap and is in place until the end of 2016.

In February 2009, the American Recovery and Reinvestment Act (ARRA) led to the implementation of a 30% cash grant in lieu of the 30% credit for projects that begin construction by the end of 2010. After that, the program reverts to the 30% credit.

The US solar market is further supported by state programs in the form of additional subsidies and renewable portfolio standards. The top 5 US states based on MW installed in 2009 (when 477 MW was installed) were: California (~50%), New Jersey (~13%), Florida (~8%), Colorado (~5%) and Arizona (~5%).

In 2010, we believe Nevada and Arizona will improve their positions in the top five due to several large scale projects completed this year. Our estimates are 900 MW for 2010, and 1,750 MW in 2011.

California

Solar volume growth in California is further supported by the California Solar Initiative, a performance and expected performance-based subsidy program.

The performance-based incentive is for residential and commercial systems ≤ 30 kW. It offers $2.50/watt AC (residential and commercial) and $3.25/watt AC (government entities and non-profits) up-front payments on expected performance based on equipment rating and specific installation factors. The performance-based incentive is for commercial systems > 30 kW. It offers $0.39/kWh for the first 5 years for taxable entities and $0.50/kWh for government entities and non-profits.

New Jersey

Solar volume growth in New Jersey is further supported by a growing Solar Renewable Energy Certificate (SREC) market. One SREC is equivalent to 1 MWh, and can be sold to utilities to meet state renewable portfolio standards (RPS).

As such, SRECs act as a performance-based incentive that sweetens returns for owners and investors in solar projects. The price of the SREC is determined primarily by market availability and price of the Solar Alternative Compliance Payment (SACP). The average price for SRECs in the New Jersey market has ranged from $300 to $700/MWh in the past two years.

Other European Markets

We believe significant capacity will be installed in Belgium, Greece, and potentially UK, Bulgaria, and Portugal. Our estimates for total demand from these markets combined are 500 MW in 2010 and 1,050 MW in 2011.

Other World Markets

A significant PV FIT program capable of boosting China’s local market is still lacking. Presently, local installations are subsidized by the Golden Sun Program and the Solar Roofs Program. However, at the end of 2011, significant new PV module manufacturing capacity is expected to come online, which should exceed demand and pressure prices.

Under this scenario, we believe the Chinese government might intervene and subsidize the local manufacturing industry starting at the end of 2011. Our estimates for PV installations in China are 350 MW in 2010 and 900 MW in 2011.

Several new solar markets are developing around the world, such as India, Thailand, Malaysia, Taiwan, the Middle East, South Africa, and Australia. We believe they will add significant global demand, especially starting in 2011. We also expect South Korea to return to significant solar installations, after a slow 2009. For these countries combined, we estimate total PV installations at 600 MW in 2010, and 1,700 MW in 2011.

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