In the past two decades, solar power has moved from being a curiosity to a commercially viable electricity-generating form of energy. More important, on the global level, the installed photovoltaic (PV) generation capacity has been doubling about every two years since 2002.
Solar is the most abundant form of energy on the planet. Converting solar directly to electricity has been in practice for more than 40 years, but it has been expensive and inefficient. PV solar technology has been maturing and improving while costs have steadily gone down as the efficiency increases.
The European Photovoltaic Industry Association (EPIA) reported that, in 2011, “PV achieved an important milestone, becoming the top finisher in the ranking of new installations among all energy sources for the first time ever — more than the combined totals for gas and wind over the same period.” It is now the third-most important renewable energy source, in terms of globally installed capacity, after wind and hydro.
According to EPIA's “2011 Market Report,” 27.7 GW of PV were added, bringing the total amount of PV installed around the world to 67.4 GW. Of that 2011 PV total, Europe accounted for almost 21 GW. This was followed by China with roughly 2 GW, the United States with 1.8 GW, Japan with 1 GW, Australia with 700 MW, and India and Canada with 300 MW each; the rest of the world accounted for the remainder.
Even with all this positive news, the past couple of years have been a rollercoaster ride for the solar industry. There have been manufacturer bankruptcies, threatened trade wars and a global economic downturn. Political uncertainties also have taken their toll on the industry.
Worldwide, feed-in tariffs have been a proverbial political football as regulators balance incentives versus utility needs. Feed-in tariffs have been reduced, eliminated, delayed or allowed to expire, which has led to canceled orders, reduced proposals and delayed projects exacerbating the situation.
According to Julio Romero Agüero, director of distribution for Quanta Technology, “Renewable energy sources interconnected to distribution systems, predominantly solar and wind, are becoming an increasing part of the energy supply to the U.S. power grid. This trend is driving changes to the way distribution systems are planned and operated.”
With 27.7 GW installed, 2011 was a bellwether year for PV installations. That number of gigawatts is an increase of roughly 69% over 2010. To put these statistics in more concrete terms, 2011's PV revenues were more than US$91 billion for modules, system components and installations.
These numbers deserve a closer look. The amazing thing about this capacity is the fact it is not made up solely of large utility-scale mega projects. It represents thousands of small and mid-sized installations with some large utility-scale installations thrown into the mix.
The Solar Energy Industries Association (SEIA) recently published the “U.S. Solar Market Insight: 2011 Year-in-Review.” The SEIA report gives a better understanding of what is going on behind the figures. SEIA states the 1,855 MW of PV solar systems installed in the United States were made up of more than 61,000 individual PV systems.
That number is not 61,000 PV panels, which would number in the millions, it is 61,000 individual PV systems. By adding these 61,000 systems to the total number of operating PV systems, there are now more than 214,000 individual PV systems operating in the United States alone, totaling about 4.2 GW.
Solarbuzz, a marketing research group, reports similar trends in Europe. In one report, Solarbuzz broke down Europe's installed systems by types for the fourth quarter of 2011. Of the 7.04 GW of PV systems installed during that period, building-mounted nonresidential installations below 100 kW each amounted to 1.84 GW, building-mounted nonresidential installations above 100 kW each accounted for 1.82 GW, and residential installations totaled 1.21 GW.
“North American utilities are experiencing a rapid proliferation of investor-owned PV distributed generation facilities,” said Quanta Technology's Agüero. “Interestingly, this is happening not only in the Southwest United States but also in places such as New Jersey or Ontario. Similar proliferation trends have been observed, in some cases for several years, in countries around the world, such as Spain, Germany, Japan and Australia.”
With millions of acres of rooftops existing in urban load centers, it is only logical to take advantage of them. They do not impact any endangered species or sensitive cultural resources. Critical lands are not removed from agricultural uses and communities are not disrupted. If permitting is required, the time needed is greatly reduced and, most important, these resources are exactly where they are most needed.
A few months ago, Bloomberg published a story about the efforts of Brazilian power regulator Agencia Nacional de Energia Eletrica to boost the installation of rooftop PV systems. New regulations allow homeowners and businesses to trade electricity generated during the day by PV solar systems for power taken from the grid at night. The agency expects up to 300,000 individual PV systems to be installed as a result of this program.
In North America, the Ontario Power Authority revised its feed-in tariffs to allow commercial aggregators to participate. The Ontario Power Authority thought this would make the benefits of PV ownership more accessible to Ontario homeowners and encourage increased PV system installations.
The U.S. Department of Energy (DOE) also is encouraging rooftop PV with its SunShot Initiative solar program. This initiative is a collaborative effort between the Electric Power Research Institute (EPRI) and industry to reduce solar energy cost by promoting PV installations. According to EPRI, San Diego Gas & Electric, Xcel Energy, DTE Energy, National Grid and Solectria Renewables are project partners.
A $344 million loan for SolarCity's SolarStrong project is being partially guaranteed by the DOE under the SunShot Initiative. SolarStrong's goal is to install more than 371 MW of PV on the rooftops of more than 160,000 military homes in 33 states. The first venture for the SolarStrong project is the 4-MW system being installed at Hickam Communities in Hawaii.
Another project under the DOE initiative is Project Amp, managed by Prologis. The DOE also is supporting this project with another partial-loan guarantee. Project Amp will spend approximately $1.4 billion to install more than 730 MW of individual PV systems on 705 industrial buildings across the country in 28 states and the District of Columbia.
The first phase of Project Amp includes the installation of 15.4 MW worth of PV systems in Southern California. All of the produced power has been sold to Southern California Edison (SCE).
Jim Mulhern, vice president, market planning and business development of Henkels & McCoy Inc., said, “Applying PV to the local distribution grid is easier to do because utilities are seeing the benefits this technology brings to the feeders. Utilities are developing connection standards for this application, much like those found on the larger installations, which, in turn, are making the process easier for everyone involved.”
Timing is Everything
Project Amp fits right into SCE's PV strategy. The utility has been installing PV systems on leased commercial rooftops such as warehouses and logistics facilities within its service territory for many years. SCE has long understood the benefits of feeding the power into neighboring homes and businesses, and avoiding infrastructure costs. As of 2011, SCE had 22 rooftop installations and one ground-mounted system, generating more than 70 MW.
Public Service Electric and Gas Co. (PSE&G) teamed up with Solis Partners in 2011 to install 921 kW of PV on the rooftop of PSE&G's central division headquarters in the Somerset section of Franklin, New Jersey, U.S. This is part of PSE&G's Solar 4 All program, which will invest about $515 million for 80 MW of solar-powered systems around the state.
“Rooftop solar makes tremendous sense for New Jersey, which has more flat commercial rooftops per square mile than any other state,” said Gary Weisman, director of sales for Solis Partners.
This trend has not been missed by the business sector, either. In Spain, the General Motors plant near Zaragoza installed more than 85,000 panels, generating 11.8 MW of electricity. The installation is the largest single-roof solar array in the world, but records are made for breaking.
Another huge installation is the Toys “R” Us distribution center in Flanders, New Jersey. Toys “R” Us and Constellation Energy are installing 5.38 MW on the roof of the distribution center. The PV installation will cover almost 20 acres (8 hectares) of the distribution center's 32-acre (13-hectare) roof.
However, another New Jersey installation, the Gloucester Marine Terminal, claims the title for the largest rooftop PV system in the United States. Gloucester Marine, in partnership with SunPower Corp., built a $42 million, 9-MW solar project in Gloucester.
The world's largest retailer, Walmart, is taking a leadership position in rooftop PV systems with installations in seven countries. The PV systems are producing more than 71 million kWh for Walmart stores in Canada, China, Japan, Mexico, Puerto Rico, the United Kingdom and the United States. Walmart has set a goal of installing rooftop PV on 75% of all its stores by the end of 2013, which will have a significant impact on PV installations.
Walmart estimates PV installations on its stores provide up to 30% of the stores' annual electricity requirements. In addition to these PV installations, Walmart has 26 fuel cell installations in the United States and is testing micro-wind and solar water heating in locations worldwide.
Redefining Distributed Generation
PSE&G also has a five-year project with Petra Solar to install an aggregation of 40 MW of PV installed in the PSE&G service territory one pole at a time. There will be approximately 200,000 PV units installed on utility poles across the state of New Jersey. Petra Solar reports this is an ambitious project. If this were a normal ground-mounted PV project, it would take about 300 acres (121 hectares) plus a lot of time and money for permitting, zoning and interconnection costs.
Distributed generation is usually defined as a variety of small modular electricity-generating technologies falling into off-grid domestic and off-grid nondomestic categories. The term “distributed” is used because the generators are located at or near the point of consumption rather than some remote centralized large-scale electricity generation.
In the past, these off-grid systems were usually backup generators based on reciprocating engines (internal combustion). They were noisy and pollutants, and the owner had to store volatile fuel on the premises. That has all changed as renewables are being combined with smart grid technologies. Now there is acceptance and widespread deployment.
As a result of all this activity, there is a new player in the game — the aggregator/broker. These third-party service providers offer choices and options to an environmentally conscious consumer. For both the residential and the commercial and industrial (C&I) owners with existing systems, these third parties offer to reduce the hassle factor and increase the return on solar investment. The agents combine many individual systems into large power blocks, simplifying the process for both the utilities and the PV owners.
There is also another third-party variation, the solar equipment leasing broker. This agent leases rooftop space on residential or C&I buildings, and installs the PV system. The agent guarantees the building owner green power and savings on utility bills. The broker controls the equipment being installed and the client does not have to pay up-front costs.
Both of these market plays work well for the end customers and the third parties because of the solar renewable energy credits (SRECs). A SREC is a rebate for the owners of PV systems. Unfortunately, there is a catch. The rebate is not a one-time payment based on capacity. It is a series of payments paid out over a period of time based on the electricity generated by the solar installation — a hassle for the individual but an opportunity for the service provider.
SRECs are governed by each state and are being tweaked and changed continuously, which is not straightforward for the average PV panel owner. The residential and C&I owner does not have the time or influence to deal with the utility or state regulators. That is where the broker comes in. The broker trades SRECs on behalf of the PV owner and does it for thousands of SRECs rather than one or two at a time.
Revolutionizing the Industry
Those in the electric power industry have talked a great deal about renewable energy and harnessing the sun to produce electricity. While the industry has been talking and analyzing, the customers have been busy. They have been quietly installing hundreds of thousands of individual PV systems on their rooftops, generating thousands of megawatts worldwide.
These end users are serious about renewable energy, reducing their carbon footprint and reducing their dependence on oil, as are the regulators. Although many in the industry are still skeptical about the potential of PV solar power and consider it a fringe element, it is hard to ignore all the activity taking place on the customer side of the meter. Remember, there are those who make things happen, those who watch them happen and those who wonder what happened.