11 Things to Know About the Solar Sector ’s Precarious Future RSS Feed

11 Things to Know About the Solar Sector’s Precarious Future

Despite escalating growth over the past decade, the U.S. solar power sector faces potentially crippling issues concerning module supply, workforce deficiencies, and grid interconnection obstacles, according to industry experts attending an international solar and energy storage convention.

The country added an estimated 14.5 GW of new solar photovoltaic (PV) capacity in 2016, and by 2021, cumulative solar installations are slated to pass the 100 GW mark, driven by net metering, solar leasing, new power purchase agreements, the rise of solar communities, and federal and state policies and tax credits. But this rapid growth has been problematic on many levels, and the industry continues to face hurdles that could stymie future projections.

Here are 11 takes on the solar sector’s current and future standing from experts at Intersolar North America’s ninth annual event held last week in San Francisco, Calif.

1.Solar Is Mainstream
“Solar is no longer a niche part of the energy spectrum,” declared Jesse Grossman, CEO of Tenaska’s solar project development arm Soltage.

Grossman noted that the recent extension of the federal investment tax credit (ITC) through 2021 is expected to spur a renewed market expansion, but “very fast rates” of growth will also be markedly fueled by new markets, particularly in the distributed utility solar, commercial and industrial (C&I) solar, and community solar sectors. Notably, larger utility-scale solar has been “dried out as interconnection and land opportunities are getting more and more scarce,” he said. But “distributed utility solar, where you are immediately connecting to medium high-voltage interconnection, selling mostly to utilities under long-term fixed contracts… those are also growing quite rapidly in the U.S.”

Solar’s rise is no longer anchored by uncertainty about whether the ITC will be extended or whether the price of panels will come down. A lot of those concerns have been allayed. “Now a lot of folks are just looking at each other saying we just have to execute. And that’s absolutely correct.”

But now, the sector’s hurdles appear to be rooted on the state level, he said. “In the first half of 2016, there were 100 different state policy actions across 39 states,” Grossman noted, including legislation on net metering, interconnection, and local tax laws. “And so, we just need to bear that in mind that a lot of the fights and work that we need to do is to go to the states to make sure we’ve got a real clean runway to continue the expansion of solar across the U.S.”

2.Solar’s Rapid Growth Isn’t Always a Boon
However, it doesn’t always help that the sector is still in a state of upheaval. “The industry is growing very fast,” commented Dr. Alexander Levran, who heads ABB’s global solar industry initiative.

While the financial community is supportive, new players are entering the solar power sector, both utilities and end-users. Technology is changing, and so is the vendor base. Utilities have embraced the sector, in some cases (as in Europe), even divesting conventional generation in favor of renewables. Finally, competition is fierce and price erosion is in the double digits, he noted.

“This is why solar’s level of estimated cost is approaching natural gas. It’s a little too fast, but that’s the way it is.”

3.Solar Is Suffering a Unique Revenue Catch-22
As it takes on an ever-larger share of the total generation mix, the solar sector has run into a unique problem whereby it is apparently sabotaging its own revenue stream, GTM Research pointed out in a white paper released last week at Intersolar.

“Solar is a zero marginal-cost resource, which means it will bid into wholesale power markets at zero dollars and take any price it can receive,” the market research firm said. “Add an increasing amount of solar to that market and prices decline overall, leading to lower revenue for each solar project. Since solar is non-dispatchable, project operators cannot strategically sell into the market at higher priced times—solar is purely a price taker (unless paired with energy storage). In fact, the more solar is placed on the grid, the less the grid needs power when solar production is highest—causing solar’s value to decline as its penetration increases.”

4.Doing Business in a Fragmented Regulatory Landscape Is Risky
In providing a bigger picture of issues ailing the industry, Dr. Lidija Sekaric, who heads the Solar Energy Technologies Office within the Office of Energy Efficiency and Renewable Energy, noted that setbacks affecting grid integration were rooted in a problematic policy space.

“Integration with the rest of the grid, integration with storage, with demand and load is really going to take care of itself—and that innovation is already happening,” she said. “The actual obstacles that we’re seeing—and is always lagging—is the regulatory space, the policy space.”

That uncertainty has recently been alleviated to some degree she said (in the U.S. by the ITC extension and in the global arena by the Paris Accord last December). What will matter most is how different jurisdictions work to push down costs. “Cost is king,” she said.

5. Solar’s Future Is Pegged to State Renewable Targets, Which Are in Flux

Read full article at Power Mag