Government incentives speed up installation of utility-scale solar power plants
The adoption of utility-scale photovoltaic (PV) and concentrating solar power (CSP) plants in the United States is expected to accelerate during the next decade. The presence of high solar irradiance, along with continuous pressure from the government to implement renewable energy technologies, fuels demand for solar projects. As solar energy competes with conventional forms of electricity generation, the potential market for utility-scale solar power plants in the country is on the rise.
New analysis from Frost & Sullivan’s (http://www.energy.frost.com) Analysis of the U.S. Utility-scale Solar Power Market research finds that the market acquired investments of more than $1.91 billion in 2011 and estimates this to reach $20.44 billion in 2016.
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Cumulative PV solar installations in the United States reached 1,855 megawatts (MW), with the utility-scale segment accounting for 32.2 percent. Lower solar module prices have led developers of utility-scale applications, such as the Blythe solar power project in California, to opt for PV technologies over CSP.
“Though no new CSP plants were installed in the United States during 2011, projects totaling more than 1.4 gigawatts were under construction,” said Frost & Sullivan Senior Industry Analyst Georgina Benedetti. “These projects in the CSP segment are likely to speed up overall market growth.”
Expediting solar installations are renewable portfolio standards (RPS), which mandate electricity supply companies to produce a specified fraction of their electricity from renewable energy sources. A few states require some portion of the RPS to come from solar resources.
Though this has led to higher adoption, investment figures have not gone up, as the average selling price of solar PV modules continues to decline.
Further, restrictions in project financing could limit investors, such as uncertainty around the extension of cash grants beyond March 1, 2013, as these are an investment tax credit substitute for developers. Since many solar project developers do not have tax liabilities large enough to efficiently capture the full amount of tax credits available, they have to rely on tax equity partners for finances.
“To be willing to fund these projects, banks and investors must be confident that a power plant will operate long enough to return their investment,” explained Benedetti. “Therefore, well-established project developers using proven technologies will have an advantage in obtaining financing.”
Federal incentives such as investment tax credits and loan programs will continue to promote large-scale commercialization of solar energy, and boost the setting up of solar plants in the United States.
Analysis of the U.S. Utility-scale Solar Power Market is part of the Energy & Power Growth Partnership Services program, which also includes: Analysis of the U.S. Residential Solar Power Market and Annual Global Power & Energy Outlook 2012. All research services included in subscriptions provide detailed market opportunities and industry trends evaluated following extensive interviews with market participants.
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Source: Frost & Sullivan
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