State of the US Solar Industry: SPI 2015 Wrap Up

There is a lot going on in the solar industry right now. Here is just a taste of some of the hot topics we heard about at the Solar Power International (SPI) held in Anaheim, California last week.

Just about everyone was talking about the pending expiration of the federal investment tax credit (ITC) at the end of 2016. If it is allowed to expire, it will reduce the existing tax credit incentives for commercial solar projects from 30% down to 10%, and the residential tax incentive will be completely eliminated. There is concern that this will have significant impact on the solar industry, leading to reduced momentum in project development and job losses.  Based on previous experience from the wind industry I think we can expect some slowdown in projects, although existing renewable energy mandates from state and federal mandates will help keep things moving on larger-scale projects at least.  However, there could definitely be a pretty big reduction in residential PV projects until the market adjusts.

On the plus side, the federal Clean Power Plan, which set standards for carbon dioxide emissions reductions from power plants, is expected to have a positive impact on renewable project development, especially solar and wind. This will firm up some of the existing markets and open up new markets for implementation. One speaker stated that the CPP is expected to drive an incremental increase of 20 GW of utility scale solar, not to mention impacts in community solar projects and distributed generation resources.  While this will clearly help push solar project development, many states may not have a significant ramp up of activity until the 2019 time frame.

Here in California, SB 350 was just passed on September 11, which increases the state RPS from the current target of 33% electric generation from renewables by 2020, to 50% by 2030.  There is also a requirement for a 50% increase in energy efficiency for existing buildings.  According to a utility representative, about 20% of the current California electric supply comes from renewable energy, and the state is on track to meet the 2020 goal.  California also has a Grid Energy Storage Mandate (CPUC Energy Storage Decision D.13-10-040), which requires 1,325 MW in operation by 2024.

Grid integration will continue to be an important consideration with an increased penetration of intermittent renewables and distributed generation resources. One way the solar industry is dealing with this is though smart inverters, which can have advanced functions such as Volt/VAR control, voltage and frequency ride-through, and reactive power control. Such functions can be helpful to improve grid stability, and can allow increased capacity on feeder lines to support distributed generation resources. In order to take advantage of these benefits, utilities need to have control and communication capabilities, which is a work in progress.

Energy storage is another way to support grid flexibility, as it can be used as a generation source as well as a load.  As stated by SEPA: “photovoltaic electricity storage technologies can be deployed in two ways—1) directly with a specific solar installation to manage its particular output or maximize benefits, or 2) within the distribution or transmission vicinity of one or more solar installations to manage the localized or system level impacts.” When grid-connected, energy storage technologies can provide ancillary services for utilities such as frequency regulation, spinning reserves, Volt/VAR support, voltage regulation, as well as cost benefits to consumers through arbitrage, peak shifting, and demand reduction. Energy storage systems can also be used for backup power or to support off-grid projects.  It is important to note that energy storage technology selection will ultimately depend on the project goals; there is no one size fits all, and no single project can provide all these different types of services effectively.

Overall, the solar power industry faces the challenges of maintaining its momentum in the light of potentially significant policy shifts, while continuing to develop new pathways for converting an intermittent, small-scale energy generation technology into large-scale dispatchable power. The past decade has been an exciting time for renewable energy, but perhaps the next decade will truly define how the US will deal with bulk power delivery for the next 100 years.

About Ali Schmidt

Anneliese Schmidt (Ali) is a project manager and lead technical analyst for ANTARES. She is experienced in technology evaluation and selection, performance and economic modeling, cost estimation, renewable energy site selection and evaluation, and assessment of greenhouse gas emissions and criteria pollutants. Her expertise covers technologies including photovoltaic and solar energy systems, biomass energy systems (including cogeneration and cofiring), and biofuel conversion technologies.

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