By Larry Sherwood June 24, 2014
Solar had another year of impressive growth last year, with photovoltaic (PV) installations increasing by 34 percent on a capacity basis to 4.6 gigawatts-DC (GWDC) compared with 2012 installations. The growth was most dramatic for the largest and smallest sized installations. Residential installed capacity increased by 68 percent compared with 2012 and utility capacity increased by 48 percent. Nonresidential distributed installations decreased by 8 percent, due in part to the end of the Treasury Cash Grant Program. California again led the states in installations with Arizona, North Carolina, Massachusetts and New Jersey rounding out the top five states (see table 1, right). Eighty-one percent of the 2013 installations were in these five states, demonstrating that the market remains highly concentrated.
By the end of 2013, the total installed PV capacity in the United States was 12.1 GWDC. Eighty-two percent of this capacity was installed in the last three years alone. 155,000 PV installations were completed in 2013, bringing the total number of U.S. installations to more than 470,000. Last year also saw the installation of three large concentrating solar power plants, the first large CSP installations since 2010.
Solar — Major New Electricity Source in 2013
Nearly one-third of all new electric capacity installed last year in the United States was solar. PV and CSP constituted 31 percent of all the new electric capacity added in the United States in 2013 (see the figure, page 21).
Recently in our country, the use of electricity has been relatively flat. Overall electricity con- sumption in the United States grew by only 0.2 percent in 2013 compared with 2012, and was 2 percent less than the total electricity consumption in 2010. The low growth is partly due to the weak economy in recent years and partly due to energy-efficiency improvements that mean that the economy can grow without a proportional increase in electricity consumption.
Thus, additions to the grid are not to supply electricity growth, but instead offset reductions in “conventional” generation, like the retirement of older power plants, or reduced use of existing power plants. This sets up a conflict, increasingly apparent, between utilities and solar proponents. When the number of solar installations was much smaller, the new capacity was easily absorbed. Now, as solar installations are much larger and more numerous, decisions must be made about how to integrate this capacity into the grid. The affected parties have differing opin- ions on how to do this.
Residential Growth Leads
For 2013, the residential sector showed the most dramatic growth at 68 percent. In California the capacity of residential installed PV doubled compared with 2012, and California installations constituted 45 percent of the nation’s total residential PV installations.
Outside California, residential installations increased by 49 percent, still an impres- sive growth rate. Beyond California, the states that had the most robust growth in residential installations of PV were Hawaii, Arizona, New Jersey and Colorado. In Hawaii, 12 percent of all single-family residential dwellings had PV by the end of 2014.
The residential market boomed due to the following factors:
- Sharply falling prices. Installed residential prices decreased 11 percent in 2013, and 26 percent over the past three years.
- Financing options. Robust third-party financing and leasing options allow customers to buy solar without large initial capital expenditures. These products finance the majority of systems in all states that have significant residential installations.
- High electricity rates. Six of the 10 states with the most residential solar installations have electric rates above the national average. The top two states — California and Hawaii — have electric prices 35 percent and 205 percent above the national average. In California, an inverted rate structure makes electricity more expensive the more one uses, and makes the use of solar even more attractive.
- Netmetering. All of the top 10 states for residential installations have netmetering policies. As other state-based financial incentives decrease or go away, net metering becomes a more important policy tool.
Federal Investment Tax Credit. This credit remains unchanged during the previous year and provides the foundational financial incentive for most residential solar installations. For the many systems where a third party owns the system, the owner is able to take advantage of accelerated depreciation, increasing the federal tax incentive.
California Drives Overall Growth
The solar market is red hot in California, and is driving the market for the whole country. California PV installations in 2013 increased by 160 percent compared with 2012 installations, and represent 57 percent of all PV installed in the nation in 2013. Without California, the title of this article would read something like, “Solar Stalls in United States in 2013.” In the rest of the country, there was overall 18 percent less solar installed in 2013 than in 2012. California was similar to the other 49 states in that growth was concentrated in the largest and the smallest installations.
Residential installation capacity doubled in California in 2013. This came in spite of the end of the very successful California Solar Initiative (CSI) program. From 2010 to 2012, CSI incentives funded 84 percent of the residential solar installations in California, and 34 percent of all U.S. residential installations. Although residential installation with CSI incentives grew by 24 percent in California in 2013 over the previous year, residential installations in the state, but outside the CSI program, grew six- fold. As the CSI program now ramps down, it does seem that overall residential installations can continue to grow.
California’s spectacular growth in solar installations was not limited to the residential market. California utility installations increased nearly four-fold compared with 2012. More than 40 percent of all U.S. PV installations in 2013 were California utility installations. Twenty-four installations, each greater than 10 megawatts (MW) in capacity, account for virtually all of this new utility-scale capacity. Eight of these installations are greater than 100 MWDC in size, including:
- The 360-MWDC Topaz PV farm in San Luis Obispo County, part of the expected 550-MWAC plant owned by MidAmerican Solar and constructed by First Solar;
- The final 146-MWDC of the 250-MWAC Cali- fornia Valley Solar Ranch in San Luis Obispo County, owned by NRG Energy and con- structed by SunPower; and
- The 230-MWAC Antelope Valley Solar facil- ity located in northern Los Angeles County, owned by Exelon and constructed by First Solar.
Utility Installations Concentrated in California, Arizona, North Carolina
In addition to PV installations, 766 MWAC of solar thermal electric installations were completed in 2013. Two plants, the Solana Generating Station in Arizona and the Genesis Solar Energy Project in California, use parabolic trough technology and are the first trough plants built since 2010. The Ivanpah Solar Electric Generating Station in California is the first commercial application of power tower technology.
Nonresidential Distributed Installations Fall
Nonresidential PV installations declined by 8 percent in 2013 compared with installations in 2012. Of the top 10 states for 2012 installations in this sector, only Massachusetts, Arizona and North Carolina saw growth in the number of installations completed in 2013. The drop in nonresidential installations was especially severe in New Jersey, Ohio and Pennsylvania. The U.S. Treasury Grant in Lieu of Tax Credit Program, commonly known as the 1603 Treasury Grant Program, ended at the close of 2012. Projects that had begun construction at the end of 2012 remain eligible for the program, but no new projects can now be accepted into this program. When incentive programs end, it is typical to see a surge of applications before the deadline and then a fall-off in installations after the deadline has passed. Falling PV prices and many of the same factors driving the residential market meant that the loss of this incentive resulted in only a small drop in installations, not a dramatic drop. This shows the underlying strength of the market.
The surge of construction related to expira- tion of the 1603 Treasury Grant program may foretell a surge in 2015-2016 in advance of any scale-back of the 30 percent federal tax credit. Rapid growth may result, at least over the next 30 months.