The development of utility-scale solar PV and Concentrating Solar Power (CSP) plants are expected to accelerate in the US during the next decade according to a new report from growth partnership company Frost & Sullivan. The demand for solar is largely being driven by a combination of government pressure and high solar irradiance expanding the market and creating more than $1.91 billion of investment during 2011 with the potential to reach $20.44 billion by 2016.
Solar PV installations in the US achieved a generation capacity of 1,855MW with utility-scale projects accounting for 32.2 percent of that figure. The fall in solar module prices have tended to encourage developers to favour PV over CSP. Installations are being expedited through renewable portfolio standards (RPS) that mandate electricity companies to generate a proportion of their electricity from renewable energy with some states requiring a portion of the RPS to come specifically from solar.
“Though no new CSP plants were installed in the United States during 2011, projects totaling more than 1.4 gigawatts were under construction,” said Georgina Benedetti, Frost & Sullivan Senior Industry Analyst. “These projects in the CSP segment are likely to speed up overall market growth.”
Although adoption of solar PV has increased, the investment figures have remained static given that the average selling price of solar modules has declined and will probably continue to do so. Restrictions on project financing may also limit investors, for example the uncertainty surrounding cash grants beyond March 2013. This has in turn led many solar project developers to rely on tax equity partners for financing. Federal incentives will however promote large-scale commercialization of solar and encourage the continued deployment of solar plants in the US.
“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” said Benedetti. “Therefore, well-established project developers using proven technologies will have an advantage in obtaining financing.”