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July/August 2008
Boom Times for SolarU.S. installations soared in 2007, but it’s up to Congress to help assure growth. By Larry Sherwood  The United States saw a solar boom in 2007. Installations of photovoltaics, solar water-heating and solar thermal electric systems all grew quickly compared to previous years. California continues to be the largest U.S. market, but other states are beginning to gain ground as they introduce favorable policies and incentives. How well these growth rates will be maintained, however, depends to a great degree on whether Congress extends federal incentives set to expire Dec. 31. Doing so will keep the installations coming, renewable energy flowing, the cost per watt produced declining and the green jobs market flourishing. PV Systems Tend LargerLast year annual U.S. photovoltaic (PV) installations grew 40 percent over 2006, to more than 200 megawatts DC (MWdc). Growth in grid-connected installations has been especially strong, with 46 percent growth in 2007 and 53 percent in 2006. Although PV installation growth has been impressive for many years, growth took off in 2006 with the initiation of the federal investment tax credit (30 percent of the cost of a solar energy system, capped at $2,000 for a residential installation). Since 2005, the annual installed capacity has more than doubled. More than 13,000 homes and businesses connected photovoltaics to the grid in 2007.Both residential and nonresidential installations grew significantly in 2007. But while the market share for residential installations has held steady at about one-third for the past three years, installed capacity of large installations grew fastest. A 14-MW installation by MMA Renewable Ventures at Nellis Air Force Base in Nevada and an 8-MW SunEdison installation for Xcel Energy in Colorado were the largest installations. Together they accounted for 15 percent of the annual installed capacity. Like these two projects, virtually all large installations and many smaller nonresidential ones are financed through power purchase agreements. Through a PPA, a third party finances and owns the solar installation and receives the incentives and tax benefits. The third party then sells the solar-generated electricity to the building or site owner through a long-term contract. The average size of a residential installation increased 7 percent to 4.8 kilowatts, and the average nonresidential installation increased by 27 percent to 67 kW. A total of 30 systems each larger than 500 kW accounted for 29 percent of the 2007 installed capacity. In 2005, such large systems accounted for only 12 percent of the installed capacity. The trend toward greater market share for large installations should continue at least through 2008. At the end of 2007 in California, 56 percent of the California Solar Initiative incentive reservations were for installations 500 kW and larger. The federal investment tax credit (ITC), set to expire at the end of 2008, is critical to make these deals financially viable. If Congress renews the ITC, the trend for more PPAs and larger nonresidential installations will likely continue. In several states, regulators are considering defining third-party owners of solar equipment as utilities. If such rulings are made, third-party owners in these states may still be able to lease solar facilities without being labeled as utilities, but their ability to use the investment tax credit will need to be clarified. If the tax credit cannot be used as readily under the leasing model, PPAs will become less viable in these states and the growth of solar installations in these states will be constrained. So where are these systems being installed? California continues to dominate the U.S. market, with 58 percent of the market, but annual installations grew an impressive 83 percent outside California. Nevada, Colorado, Hawaii, Connecticut and Oregon doubled their annual installations compared with 2006. All of the top 10 states have major state or utility incentives for PV installations. Top 10 States for Grid-Tied Photovoltaic Installations in 2007
State Capacity (megawatts-dc) 1. California ...............................................87.1 2. New Jersey ..........................................16.4 3. Nevada .................................................14.6 4. Colorado ...............................................12.5 5. New York ...............................................4.4 6. Arizona ...................................................2.8 7. Hawaii......................................................2.4 8. Connecticut ............................................1.8 9. Massachusetts ......................................1.4 10. Oregon .................................................1.1 All Others ...................................................5.6 Federal Incentives Spur Solar Water ProjectsIn 2006 new federal tax credits, together with rising conventional energy prices, caused the solar water-heating market to explode. Prior to 2006, about half of the solar water heaters sold each year in the United States were in Hawaii due to that state’s utility rebates, state tax credits and high energy prices. In 2006, national installations were 2.4 times the number in 2005, and installations outside Hawaii quadrupled.In addition to Hawaii, Florida and California lead the states in solar water-heating installations. Hawaii is likely to remain a leader in this technology. In May, the state legislature passed a measure requiring that all homes built after 2010 in Hawaii be equipped with solar water heaters.
Last year saw a major reemergence of utility-scale solar thermal electricity, as Nevada Solar One, a 64-MW plant, went online in Boulder City, Nev. Combined with a 1-MW plant built the previous year in Arizona, these two plants mark the first U.S. solar thermal electric installations in more than a decade. Previously, the last solar thermal electric installations took place in the late 1980s and early 1990s. Those plants, comprising 354 MW, continue to operate today. |
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