CAMBRIDGE, USA: With over 5 GW of power purchase agreements (PPAs) currently under contract through 2015, US utilities are becoming a key driver of future growth for the global PV industry.
These utilities are claiming their position as the industry’s next critical demand center with state renewable portfolio standards (RPS) looming and global PV players shifting their sights from saturated European feed-in tariff markets to the large-scale potential of the US PPA market.
“Utility PV in the U.S. is a $1 billion market in 2010 and is projected to reach $8 billion by 2015,” said Shayle Kann, the report’s author and GTM Research’s MD of Solar Research. “Solar industry players across the value chain have taken note, flocking to the market en masse to take advantage.”
At present, US-based First Solar holds more than 40 percent of all contracted PPA capacity in development nationwide, with other US-based developers SunPower, Sempra Generation, LS Power and SunEdison combining for an additional 22 percent of contracted capacity. While these domestic developers represent first movers in the market, global players are looking for a foothold -- and employing a variety of strategies to achieve it.
“Foreign entrants like Iberdrola Renewables and juwi solar, with robust PV portfolios abroad, are parlaying their experience to earn utility market share stateside,” said Kann. “In addition, PV manufacturers such as Sharp, Solyndra, and GCL Solar are seeking their own entry into the project development market, often as an opportunity to secure sales channels for their own products.”
While all of this makes for a vibrant U.S. utility market, the sector is still nascent, with less than 250 MW currently operating and a number of challenges looming in the coming years.
Financing bottlenecks caused by slow economic recovery and the potential non-extension of the US Treasury cash grant will be an obstacle to timely project completion. In addition, competitive PPA bidding processes have led to contracts being signed at untenable price points for project developers.
These projects will rely heavily on stark PV price declines over the coming years in order to reach completion.