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NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.
Solar Industry Update
David Feldman National Renewable Energy Laboratory Presented at: National Summit on RPS Session: Outlook for Renewable Energy Technologies: Technology and Cost Projections November 6, 2013
2
0
10
20
30
40
50
60
70
2008 2009 2010 2011 2012 2013P 2014P 2015P
PV
An
nu
al
Inst
allati
on
s (G
WD
C) Europe
ROW
India
Japan
China
U.S.
-10
0
10
20
30
40
50
60
2013P
Old
2013P
New
2014P
Old
2014P
New
2015P
Old
2015P
New
PV
An
nu
al
Inst
allati
on
s (G
WD
C)
Q1'13 projections vs. Q3 '13 projections
Europe ROW India Japan China U.S.
Global PV Demand
• BNEF predicts that in 2013 for the first time more PV will come on-line globally than wind – both around 35 GW
• Continued increase in global installations expected through 2014
• As European demand declines, U.S. & developing world markets expected to grow
Note: P = projection. Sources: data displayed represents the median figures from the following sources, New: BNEF (08/21/13, 09/26/13), Deutsche Bank (09/26/13), Goldman Sachs (09/30/13), Stifel Nicolaus (09/04/13) Old: BNEF (02/08/13, 03/29/13), Deutsche Bank (03/01/13), Goldman Sachs (01/03/13), Stifel Nicolaus (01/22/13).
Historic Projection
3
Global PV Manufacturing Capacity vs. Demand
• In 2012 global PV manufacturing had 109% more module capacity than necessary for demand
• Overcapacity is projected to remain through 2015
• Thin-film still projected to remain small portion of overall mfg. capacity
Note: P = projection Sources: data displayed represents the median figures from the following sources: Module mfg. capacity: GTM “WCM Database, September 2013.” Demand: BNEF (08/21/13, 09/26/13), Deutsche Bank (09/26/13), Goldman Sachs (09/30/13), Stifel Nicolaus (09/04/13)
Historic Projection
0
10
20
30
40
50
60
70
80
90
2008 2009 2010 2011 2012 2013P 2014P 2015P
Mo
du
le C
ap
acit
y (
GW
)
Thin-Film Mfg. Capacity
c-Si Mfg. Capacity
Global Installation Additions
4
Module Efficiency
Graph and analysis courtesy of Carolyn Davidson, NREL, using data from California Solar Initiative database March 2013 (unpublished).
• Average efficiency of modules installed in CSI territory have gone up by ~1.5% in past 5 years
• Will need an acceleration of efficiency improvement to get to SunShot targets
• Third-party installers have historically been less likely to install high efficiency modules
• Controlling for capacity, time and incentive type, systems electing PBI employ 0.30% higher efficiency modules, on average, than ones that elect rebates
• Incentive structures could have impact on type of panel installed
• Many other factors also influence decision-making as well
5
First Solar 2017 Roadmap
Sources: Corporate public filings
First Solar plans to cut their costs nearly in half in the next four years, again
6
SunEdison 2016 Roadmap
SunEdison targets similar cost to First Solar
Sources: Corporate public filings
7
Overall conclusion from roadmaps: industry is shooting for module costs to be $0.40/W or less in the near future – 25% margins would give a price of $0.50/W
• Not clear what efficiency goals are at this price
• With continued mfg. overcapacity expected by analysts, uncertain whether mfg.’s will spend money on new equipment
• Major cost reductions may have to come from “soft-costs”
Sources: GTM Research: PV Technology and Cost Outlook, 2013 – 2017 ( June 2013)
Best-In-Class Module Cost Reduction Q4 ‘12 – Q4 ’17 (GTM Estimate)
8
PV System Price by Country - 2012
Sources: IEA PVPS (01/18/13); Bundesverband Solarwirtschaft e.V. (BSW-Solar), August 2013. Currency conversion: http://www.oanda.com/currency/average; CSI Database, accessed 9/30/13.
• Reported U.S. residential prices in 2012 were significantly higher than other mature PV markets
• In particular, the higher priced U.S. markets were 2-3x the price of other countries
• China achieved low installation prices without the installation experience of places like Germany, Italy or even U.S.
$0
$1
$2
$3
$4
$5
$6
$7
Syst
em
Pri
ce (
$/W
)
Residential Systems
Price Range
Typical Price
$2.19
$4.81
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
Q1
2007
Q1
2008
Q1
2009
Q1
2010
Q1
2011
Q1
2012
Q1
2013
Syst
em
AS
P (
$/W
)
System Pricing: California vs. Germany
Germany PV, < 10 kW
California PV, < 10 kW
9
PV System Price by Country - 2012
Source: IEA PVPS (01/18/13)
• U.S. commercial scale system prices also lagging other countries, with higher end prices up to 4x more expensive – though there is a large range
• Australia’s commercial & utility-scale business, which is reportedly in their nascent stages, have prices higher than their residential market segment
• In utility space, U.S. is much more comparable in price to other countries, though still on higher end
• U.S. utility-scale systems installed more efficiently than res./com. sectors, and potentially able to spread costs over more MW’s
$0
$1
$2
$3
$4
$5
$6
$7
Syst
em
Pri
ce (
$/W
)
Commercial Systems
Price Range
Typical Price
$0
$1
$2
$3
$4
$5
$6
$7
Syst
em
Pri
ce (
$/W
)
Utility-Scale Systems
Price Range
Typical Price
10
U.S. Installation Breakdown
• U.S. Installed 832 MW of PV in Q2 ’13, 1.5 GW in H1 ‘13
• Challenges maintaining growth rate in all sectors/states • Net metering and rate design in CA, CO, AZ,
TX • GTM reports that developers in HI had
difficulties with changing permit fees, state tax credits, and market saturation in some key geographies
• H1 2013 U.S. non-residential market was 11% less than H1 2012
• Other markets opening up could spur demand such as MN, GA, NY (50kW-200 kW systems)
• Cumulative U.S. PV is expected to exceed 10 GW in Q3/Q4 ’13 • A PV project will be installed, on average,
every 4 minutes
Note: “Next Four States”: NC, MA, HI, CO. Sources: GTM/SEIA : U.S. Solar Market Insight Q2 2013.
California
438
Arizona
90
New
Jersey
75
Next
Four
States*
141
Other
89
U.S. PV Installations by State (MWDC), Q2 '13
56 60 63 67 72 68 75 88 107 111 126 146 164 164 63 64 94 115 168 224 175 261
304 212 245
307 243 216
22 55 22
167 38 50
227
445
134
498 310
861
318 452
142 180 179
349 278
342
477
794
544
821
682
1,315
725
832
0
200
400
600
800
1,000
1,200
1,400
Q1
'10
Q2
'10
Q3
'10
Q4
'10
Q1
'11
Q2
'11
Q3
'11
Q4
'11
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
Q2
'13
Qu
art
erl
y P
V I
nst
alled
(M
WD
C)
U.S. PV Installations by Market Segment
Utility
Non-Residential
Residential
11
2013 YTD System Price Distribution by Region (2.5 kW – 10 kW)
• Most prices reported between $4-$6/W, however in many states 20%-40% below $4/W Sources: CSI Database, accessed 09/30/13; MA SREC Program, accessed 09/30/13; Arizona Public Services, & Salt River Project, accessed 10/02/13; NJ SRP & REIP, accessed 07/31/13; NYSERDA (09/30/13) Note: NYSERDA actually represents all “residential” sector data, and is the simple average price per quarter. All other data is weighted by capacity.
0
20
40
60
80
100
<
$2.5
2.5 -
3.0
3.0 -
3.5
3.5 -
4.0
4.0 -
4.5
4.5 -
5.0
5.0 -
5.5
5.5 -
6.0
6.0 -
6.5
6.5 -
7.0
7.0 -
7.5
>
$7.5
% o
f C
ap
acit
y I
nst
alled
Installed Price ($/W)
New York & New Jersey
% of MW's installed, NY
% of MW's installed, NJ
Cumulative Distribution, NY
Cumulative Distribution, NJ
0
20
40
60
80
100
<
$2.5
2.5 -
3.0
3.0 -
3.5
3.5 -
4.0
4.0 -
4.5
4.5 -
5.0
5.0 -
5.5
5.5 -
6.0
6.0 -
6.5
6.5 -
7.0
7.0 -
7.5
>
$7.5
% o
f C
ap
acit
y I
nst
alled
Installed Price ($/W)
Massachusetts
% of MW's Inst.,
H.O. % of MW's Inst.,
3rd-party Cum. Distrib.,
H.O. Cum. Distrib.,
3rd-party
0
20
40
60
80
100
<
$2.5
2.5 -
3.0
3.0 -
3.5
3.5 -
4.0
4.0 -
4.5
4.5 -
5.0
5.0 -
5.5
5.5 -
6.0
6.0 -
6.5
6.5 -
7.0
7.0 -
7.5
>
$7.5
% o
f C
ap
acit
y I
nst
alled
Installed Price ($/W)
Arizona
% of MW's installed
Cumulative Distribution
3rd-party
skew
Majority of
state 3rd-party
installs. Value
Pricing or
standard install?
0
20
40
60
80
100
<
$2.5
2.5 -
3.0
3.0 -
3.5
3.5 -
4.0
4.0 -
4.5
4.5 -
5.0
5.0 -
5.5
5.5 -
6.0
6.0 -
6.5
6.5 -
7.0
7.0 -
7.5
>
$7.5
% o
f C
ap
acit
y I
nst
alled
Installed Price ($/W)
California
% of MW's Inst.,
H.O. % of MW's Inst., 3rd-
party Cumulative Distrib.,
H.O. Cumulative Distrib.,
3rd-party
12
3rd-Party System Ownership by Region
• 3rd-party ownership continues to dominate residential sector in several markets
• AZ & CA % have leveled off in past year – with continued sales of some host-owned systems
• New availability of residential loans
• Rebounding of housing market allow systems to be financed through mortgages or home equity loans
• Some customers may prefer owning system
Sources: CSI Database, accessed 09/30/13; MA SREC Program, accessed 09/30/13; Arizona Public Services, & Salt River Project, accessed 10/02/13.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q4
'10
Q1
'11
Q2
'11
Q3
'11
Q4
'11
Q1
'12
Q2
'12
Q3
'12
Q4
'12
Q1
'13
Q2
'13
Q3
'13
% o
f In
stalled
Cap
acit
y
Residential Systems
AZ
CA
MA
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013 YTD
% o
f In
stalled
Cap
acit
y
Commercial Systems
AZ (0 kW - 25 kW) AZ (25 kW - 2 MW)
CA (0 kW - 25 kW) CA (25 kW - 2 MW)
13
Utility Involvement in 3rd party ownership/distributed systems
• Utilities making strategic investment in distributed solar to diversify risk
• “On its face you would look at it and say distributed generation is a threat," said Nick Akins, chief executive of American Electric Power, in an interview.” But on the other hand we see it as an opportunity because our business is changing. There's no getting around it."
• SolarCity has formed partnerships with Direct Energy and Crius Energy Trust (both energy retailers) to finance projects for utilities’ customers
• Direct Energy and SolarCity sign $124MM deal to provide solar to Direct Energy’s business customers
• Crius has 230,000 customers in 9 U.S. states. SolarCity will now offer residential products to them
• Partnerships are designed to reduce SolarCity’s customer acquisition costs
• SolarCity also purchased Paramount Solar, a lead generation firm it had been working with, to improve customer acquisition as well
• Edison International, which owns SCE, announced in Aug. ‘13 it had bought SoCore Energy, a distributed solar developer focused on commercial rooftop installations
• In H1 ‘13, Edison International, Duke Energy and two other undisclosed utilities were part of a $42MM corporate investment in Clean Power Finance
• In May ‘13, the IPP Nextera, which owns mostly wind, natural gas and nuclear assets, acquired Smart Energy Capital, a commercial solar project developer
• Smart Energy Capital has been involved in 75 MW of PV deployment; Nextera operates 18 GW of energy assets
• Other utilities are investing in portfolios of projects (PG&E) or installing solar panels themselves (Dominion, PSE&G)
Sources: BNEF (09/11/13); Cleantech Finance (07/03/13), 09/23/13); Forbes (08/13/13); Greentech Media (05/16/13); Wall Street Journal (05/28/13).
14
US Solar PPA Price (Utility Projects)
* Represents aggregation of three projects in California. Source: BNEF H2 2013 NA PV Outlook.
• PPA prices have continued to decline due to intense competition among solar developers
• Macho Spring was signed for $58/MWh however benefits from a $27/MWh state tax credit
• As states near RPS targets and RFP’s taper out, PPA’s are becoming harder to find
341 MW
32 MW
$-
$50
$100
$150
$200
$250
$300
Feb-08 Jul-09 Nov-10 Apr-12 Aug-13 Dec-14
PPA
Pri
ce (
$/M
Wh
)
Signing Date
*
15
>200 MW >100 MW >10 MW
685
578
257
109
148
61
118
75
121
30 28
37
Large PV, In Operation (> 1 MW)
Note: PV Capacity is quoted in Watts AC. Sources: SEIA Major Solar Projects, 02/05/13; GTM/SEIA U.S. Solar Market Insight Q3 2012
35
Total (MW) Operating 2,387 Under Construction 2,870 Under Development 18,877
10
15
17
20
10
16
>200 MW >100 MW
>10 MW
2,290
227
108
100
40
89
33
Large PV, In Construction (> 1 MW)
>2,000 MW
Note: PV Capacity is quoted in Watts AC. Sources: SEIA Major Solar Projects, 02/05/13; GTM/SEIA U.S. Solar Market Insight Q3 2012
Total (MW) Operating 2,387 Under Construction 2,870 Under Development 18,877
10
20
19
17
>1,000 MW >250 MW >25 MW
12,708
1,183
1,858
67
964
136
719
Large PV, In Development (> 1 MW)
>10,000 MW
70
60
423
68
155
75
Note: PV capacity is quoted in watts AC. Sources: SEIA Major Solar Projects, 02/05/13; GTM/SEIA U.S. Solar Market Insight Q3 2012
84
Total (MW) Operating 2,387 Under Construction 2,870 Under Development 18,877
25
36
40
30
49
18
U.S. Large CSP Pipeline (> 1 MW)
Note: CSP capacity is quoted in watts AC. Sources: SEIA Major Solar Projects, 02/05/13; GTM/SEIA U.S. Solar Market Insight Q3 2012
364 922
3,089
75 110
1,150
8 280 805
200
75
2 5
In Operation In Construction In Development
Trough Tower Linear Fresnel Dish-engine/Micro Total Operating 510 5 5 4 524 Under Construction 815 502 0 0 1,317 Under Development 1,439 3,790 5 10 5,244
• 2 of 7 projects under construction have storage (6 & 10 hrs.) • 2 of 18 operating projects have storage (0.5 & 3 hrs)
19
Capacity Additions to Satisfy Solar RPS Carve-outs
• 16 states (and D.C.) have a solar carve-out in their RPS • By 2028 states are required to produce ~16 TWh’s of solar - ~11 GW
• Represents 0.4% of U.S. electricity sales • ~4GW in Southwest (~1.6 GW installed as of Q3 ‘12)
Southwest
Atlantic
Midwest
Sources: RPS: DSIRE RPS Spreadsheet120612, Retail Sales: 2011 EIA
AZ
CO
NM
NV DC DE
MA MD NC NH
NJ
NY PA OH
IL
MO
0
2
4
6
8
10
12
2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028
Cu
mu
lati
ve P
V C
ap
acit
y (
GW
)
20
Total RPS Targets of all 29 States with Laws
• Solar is incentivized beyond carve-out through total RPS targets • Solar carve-out is a small portion of the total RPS goals
• 16 TWh solar carve-out vs. 370 TWh’s by 2020 (10% of U.S. electricity sales) • If California, which has no solar carve-out, satisfied additional RPS requirements from 2012-2020 through
solar installations, it would represent ~22 GW • CO ~7GW (solar carve-out 1.1 GW) • NV, NM, AZ ~2 GW • Other regions more likely to use larger % of Wind (and some RPS’s have % req. for other technologies)
• Other factors may push solar installations beyond RPS targets
Sources: RPS: DSIRE RPS Spreadsheet120612, Retail Sales: 2011 EIA. Assumed capacity factor 1,400 kWh/kW
0
50
100
150
200
250
300
350
400
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
RP
S C
om
plian
t T
Wh
East
Coast Midwest
West
TX
CO
AZ
NM
NV
CA
21
David Feldman Senior Financial Analyst
National Renewable Energy Laboratory
202-488-2231
Thank You