Market analyst, GTM Research, has published a new report entitled “The U.S. Utility PV Market: Demand, Players, Strategy and Project Economics Through 2015” showing that attention is focusing on the utility-scale PV market in the US, which could make the US market a global industry driver over the next five years, with market potential approaching an estimated $8 billion per year by 2015.
Along the value chain, utility affiliates, independent power producers and integrated PV manufacturers such as First Solar and SunPower are driving development and leading in power purchase agreement contract capacity nationwide. Major incumbents from Europe and Japan are also entering the US, a number of which are PV manufacturers following in First Solar’s and SunPower’s footsteps by pursuing a downstream integration strategy in order to ensure a sales channel for their products.
CSP under siege
Meanwhile, further GTM Research shows an altogether different picture in the American CSP market, with installations expected to slow down in 2011. It is estimated that only 472 MW are slated to come online this year compared to 767 MW deployed in 2010.
Although “Concentrating Solar Power 2011: Technology, Costs and Markets” finds that growth is expected to resume in 2012 with more than 1,200 MW installed, and an even more significant spate of growth is forecast in 2013 and beyond (when annual installations should top 2,000 MW), GTM Research highlights that strong demand for utility PV and its falling installed costs could impact negatively on the CSP market in the US.
“The trend of CSP projects being converted into PV projects is a troubling one,” says Brett Prior, the report’s author and a senior analyst at GTM Research. “Simultaneously, CSP is experiencing unprecedented growth and facing extinction. Certain projects that were announced in 2007 to 2009, and already have utility contracts, are finally securing financing, breaking ground and will eventually become the largest solar plants the world has ever seen. However, the majority of the industry is at risk thanks to the dramatic decline in PV costs, which creates a situation where utilities are more often choosing lower-cost PV options over CSP, thereby pushing the industry toward potential obsolescence.”
The current competitive environment is personified by the opposing fortunes of the industry; BrightSource’s Ivanpah project and Abengoa’s Solana make significant progress, while early-mover Tessera Solar has been forced to lay off employees and sell its flagship Calico project to a PV developer.
CSP plants coming online in the next few years will undoubtedly help manufacturers further down the experience curve move towards lower costs, as GTM Research forecasts CSP project costs to decline 3% to 7% per year in the period 2010 to 2020. However, PV costs will also continue their own substantial declines, with PV expected to maintain a cost advantage (on both a cost-per-watt and cost-per-kWh basis) through 2020.
Storage: CSP’s ace card
While it is clear that CSP developers need to improve their costs if CSP projects are to become attractive again, this form of solar power does have one ace card, thermal storage, which could enable it to compete head-on in the US solar market. "Thermal storage could be the key differentiation that allows CSP to compete head-to-head with PV - and win,” comments Prior. “By cost-effectively incorporating storage, CSP offers utilities a solution that better matches the electricity demand profile, and exhibits far less spikiness than PV."
If CSP is not able to lower costs and improve its competitive position through storage over the next few years, Prior warns that the long-term future for CSP could be bleak.
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