In 2011, the annual U.S. solar capacity broke the 1-GW threshold for the first time. As capacities have grown, so has the influence of utilities over solar markets.
The Solar Electric Power Association's (SEPA) fifth-annual Utility Solar Rankings analyzes the amount of new solar power interconnected by the more than 240 most solar-active U.S. electric utilities in 2011, representing more than 99% of the U.S. solar electric power marketplace.
Utilities are adapting to solar as their fastest-growing electricity source. In 2011, utilities interconnected more than 62,500 photovoltaic (PV) systems, a 38% growth over 2010. Thirteen utilities interconnected more than 1,000 PV systems and 22 interconnected more than 500 systems. In comparison, about 350 non-solar power plants (>1 MW) were expected across the entire United States in 2011.
This annual volume of solar interconnections is unlike anything the utility industry has managed previously and poses strategic questions for utilities:
Rapid Rise in Solar Power
How will utilities physically process this volume of interconnection requests?
How will the distribution grid accommodate this high-penetration growth?
How will the utility and solar industries resolve the economic implications of reduced sales of electricity?
For the fourth straight year, utilities integrated a record amount of new solar power. The nation's most solar-active utilities integrated almost 1,500-MW AC of new solar, equivalent to six natural gas power plants. These 2011 numbers represent a 120% growth in the megawatts installed over 2010. Fifteen utilities reported integrating more than 20 MW each, and eight reported more than 50 MW each. SEPA expects continued growth in 2012, driven by sustained price decreases and a build-out of large solar power plant contracts.
Utility-driven solar procurement is vital to rapid solar market expansion. Utility-driven procurement represented 39% of the new solar capacity in 2011 versus 9% in 2008. As compared to the more traditional customer-oriented market segment, this sector consists of direct wholesale purchases and utility-owned projects, which were 26% and 13% of the market respectively. Large solar projects (>10 MW) make up the bulk of this capacity with an estimated 18 projects totaling 332 MW. SEPA anticipates that this utility segment could increase to 1,500 MW in 2012, equivalent to the 2011 market in its entirety.
The Top 10 annual national rankings measure a utility's newly integrated solar power and includes PV systems interconnected in 2011. Pacific Gas & Electric (PG&E) in California ranked first, installing 288 MW. The company's portfolio was about half large projects, including three utility-owned projects totaling 50 MW and a 38-MW power purchase agreement with the largest project completed in the United States in 2011. PG&E also integrated more than 13,600 customer-sited projects — over 20% of the total.
Public Service Electric & Gas in New Jersey ranked second with 181 MW, a 142% growth over 2010. Its portfolio was 83% distributed projects and 13% utility-owned.
Arizona Public Service (APS) moved into third place with 144 MW, a nearly five-fold increase over 2010. APS installed three centralized, utility-owned projects, leading the utility to own about one-third of its new solar generation. Two municipal utilities also ranked, with Sacramento Municipal Utility District in California and Long Island Power Authority in New York ranking seventh and ninth, respectively.
To make this year's Top 10 rankings required a minimum of 45 MW, compared to 20 MW in 2010. Going forward, expect larger numbers in 2012, especially with centralized projects.
The most solar-active utilities aren't talking about solar in the future, they are already engaged with solar in substantial ways. A few years ago, the solar integrated into the grid was dominated by customer-owned, net-metered systems. There is a marked shift toward the utility-side of the meter as utilities influence solar markets in new ways.
As solar markets grow, utilities are already adapting to this rapid growth and the operational and regulatory changes that it requires, and in the process laying a path that other utilities will soon follow. Utilities need to look at solar strategically over their typical 10-year to 15-year resource planning horizons and plan accordingly.
Mike Taylor ([email protected]) is the director of research for SEPA.
Editor's note: The full report includes additional analysis and discussion on the national rankings, including the cumulative utilities' solar portfolios and annual rankings by region and utility type. For more information, visit www.sepatop10.org.