U.S. Solar Energy Demand Dynamics

• Publication date: July 2009

U.S. Solar Energy Demand DynamicsFinancing Structures, Government Incentives, and Market Drivers for Solar Voltaics Projects: 2009-2015The United States has become one of the more aggressive nations in promoting alternative energy technologies, but at the federal level tax credits and depreciation incentives are not currently enough to encourage sustainable demand growth. Instead, some states and municipalities have taken...

U.S. Solar Energy Demand Dynamics

Financing Structures, Government Incentives, and Market Drivers for Solar Voltaics Projects: 2009-2015

The United States has become one of the more aggressive nations in promoting alternative energy technologies, but at the federal level tax credits and depreciation incentives are not currently enough to encourage sustainable demand growth. Instead, some states and municipalities have taken the lead in providing incentives through a variety of mechanisms ranging from upfront rebates and property tax credits to renewable energy credits and even European-style feed-in tariffs. Pike Research’s extensive interviews with both end-users and manufacturers conclude that for sustained growth in the U.S., incentives must be increased at the federal level. Due largely to the credit crisis, funding for solar projects has been tight. In the U.S., this has particularly been the case, because banks are unwilling to lend to projects that have undetermined cash flows.

Our five-year outlook is that the combination of federal and state incentives and falling module prices will work together to dramatically increase demand in the U.S. As more banks become comfortable with funding these projects, and find ways to securitize the cash flows, we believe it will become an attractive revenue stream for solar lending divisions. Utilities, which are just now getting serious about meeting RPS goals, will likely take the lead in developing new solar projects. Until now, they have been unsuccessful in getting support from their ratepayers who would see up to a 10% increase in their utility bills. However, we believe that the emphasis that the Obama administration is placing on climate change will eventually filter into the fabric of American society, propelling the U.S. into a global leadership position in solar PV market share by 2014, according to our most recent forecast.

This Pike Research report examines demand-side dynamics for solar PV projects in depth, analyzing government incentives, financing structures, and internal rates of return on a state-by-state level. Cost components for solar project development are quantified in detail, and the report also includes forecasts for leading solar PV markets around the world in addition to the U.S., providing a clear and actionable view of the size and timing of market opportunities.

Key questions addressed:

• Which states provide the best subsidies to supplement federal tax credits?
• How has the global credit crisis impacted solar demand, and what is the current financing environment?
• What are recent trends in pricing for fully installed solar PV systems?
• Why do lower installed costs have little impact without easing of credit?
• What are the key government subsidy mechanisms for encouraging solar demand?
• How will profitability be distributed within the solar value chain?

Who needs this report?

• Utilities
• Solar Project Developers
• Solar Installers/Integrators
• Solar Cell and Module Manufacturers
• Solar Equipment Vendors
• Government Energy and Environmental Agencies
• Investment Professionals
• Solar Industry Associations

Solar Photovoltaic Industry in the United States

• 1. Executive Summary
• 1.1 U.S. Lags Europe in Solar
• 1.2 Federal Incentives Fall Short
• 1.3 Areas Seeing the Greatest Demand
• 1.4 The Biggest Disappointments of 2009
• 1.5 The Financing Roadblock
• 1.5.1 Remedies for the Financing Shortfall
• 1.6 Module Prices
• 1.7 Five-Year Outlook
• 1.7.1 Returns and Demand
• 2. Governmental Demand Creation Mechanisms
• 2.1 European Feed-In Tariffs Light the Fire
• 2.2 Japan Used Cash to Hook Investors
• 2.3 U.S. State Renewable Portfolio Standards
• 2.4 U.S. Federal Investment Tax Credits and Other Incentives
• 2.5 Incentive Mechanisms at the State and Local Levels
• 2.5.1 State Rebate Programs
• 2.5.2 Adopting European-Style Feed-In Tariffs
• 2.5.2.1 Solar Renewable Energy Credits (SRECs)
• 2.5.3 Net Metering
• 2.5.4 Credit Multipliers and Set-Asides
• 2.5.4.1 Credit Multiplier Example
• 2.5.4.2 Solar Set-Aside in Addition to a Multiplier
• 3. Industry Demand Drivers
• 3.1 Legislation, Regulations, Incentives, and Subsidies
• 3.1.1 Module, BOS, and Installation Costs
• 3.1.2 Availability and Cost of Financing
• 3.1.3 DOE Loan Guarantees
• 3.1.3.1 DOE’s Solar Energy Technologies Program
• 3.1.4 Availability of Land for Utility-Scale Projects
• 3.1.5 Sizing Up the Rooftop Market
• 3.2 Credit Crunch
• 3.2.1 Eventual Financing Improvements
• 4. Economics Overview
• 4.1 Traditional Energy Sources
• 4.1.1 Short-Term Trends in Electricity Consumption
• 4.1.2 Regional Price Trends
• 4.1.3 Levelized Cost of Energy Analysis
• 4.1.3.1 LCOE Comparison between Power-Generating Technologies
• 4.2 Pricing
• 5. Segment Analysis
• 5.1 Residential Overview
• 5.1.1 Rebates from Utilities
• 5.1.2 Payment Methods
• 5.1.3 Aesthetic Premium
• 5.1.4 Absolute Power vs. Yield
• 5.1.5 Competing Technologies
• 6. U.S. Renewable Energy Demand Forecast
• 6.1 United States Continues to Lag Behind Europe
• 6.2 U.S. Energy Independence
• 6.3 The Stimulus Plan and Job Creation
• 6.4 The Pickens Plan
• 7. Regions and States
• 7.1 New Jersey
• 7.1.1 SREC Program Details
• 7.1.2 Utility Loan Programs
• 7.2 New York
• 7.2.1 Installers are the Gatekeepers
• 7.3 Connecticut
• 7.3.1 Rebate and Leasing Programs
• 7.3.2 Net Metering
• 7.4 Florida
• 7.4.1 Solar Energy System Incentives Program
• 7.4.2 Florida City Programs
• 7.4.2.1 Tallahassee
• 7.4.2.2 Gainesville
• 7.4.2.3 Orlando
• 7.5 North Carolina
• 7.5.1 NC GreenPower
• 7.5.2 Net Metering
• 7.6 Minnesota
• 7.6.1 Rebate Program (Xcel Energy)
• 7.6.2 Net Metering
• 7.6.3 Renewable Development Fund
• 7.6.4 PPAs
• 7.6.5 Residential Loans
• 7.6.6 RPSs
• 7.7 Texas
• 7.7.1 LoanSTAR Revolving Loan Program
• 7.7.2 Utility Rebates and Other Incentives
• 7.7.2.1 Austin Energy
• 7.7.2.2 Bryan Texas Utilities (BTU)
• 7.7.2.3 CPS Energy
• 7.7.2.4 Guadalupe Valley Electric Cooperative
• 7.7.2.5 Oncor Electric
• 7.7.3 State and Local RPS Targets
• 7.8 Colorado
• 7.8.1 Rebate Programs
• 7.8.2 Tax Exemptions
• 7.8.3 Net Metering
• 7.8.4 Solar Loans
• 7.9 Michigan
• 7.9.1 Rebates
• 7.9.2 Low-Income and Energy Efficiency Fund
• 7.9.3 Net Metering
• 7.9.4 Tax Exemptions
• 7.10 California
• 7.10.1 California Solar Initiative
• 7.10.2 New Solar Homes Partnership
• 7.10.3 Solar Loans
• 7.10.4 PPAs
• 7.10.5 Net Metering
• 7.11 Arizona
• 7.11.1 Tax Credits and Exemptions
• 7.11.2 Loan Programs
• 7.11.3 Rebate Programs
• 7.11.3.1 APS Renewable Incentive Program
• 7.11.3.2 SRP EarthWise Solar Energy Program
• 7.11.3.3 Sulphur Springs Valley EC SunWatts Rebate Program
• 7.11.3.4 TEP Renewable Energy Credit Purchase Program
• 7.11.3.5 Trico Electric Cooperative SunWatts Incentive Program
• 7.11.3.6 UES Renewable Energy Credit Purchase Program
• 7.11.4 City of Scottsdale
• 7.11.5 Net Metering
• 7.12 New Mexico
• 7.12.1 Tax Credits and Tax Exemptions
• 7.12.2 RECs
• 7.12.2.1 El Paso Electric Company
• 7.12.2.2 PNM
• 7.12.2.3 Xcel Energy
• 7.12.3 Net Metering
• 7.13 Washington
• 7.13.1 Solar Loans
• 7.13.1.1 Clallam County PUD
• 7.13.1.2 Clark Public Utilities
• 7.13.1.3 Ferry County PUD No. 1
• 7.13.1.4 Franklin County PUD
• 7.13.1.5 Klickitat PUD
• 7.13.1.6 Port Angeles Public Works & Utilities
• 7.13.1.7 Snohomish County PUD No. 1
• 7.13.2 Solar Rebates
• 7.13.2.1 Clallam County PUD
• 7.13.2.2 Franklin County PUD
• 7.13.2.3 Klickitat PUD
• 7.13.2.4 Orcas Power & Light
• 7.13.2.5 Port Angeles Public Works & Utilities
• 7.13.2.6 Richland Energy Services
• 7.13.2.7 Snohomish County PUD No. 1
• 7.13.3 PPAs and Net Metering
• 7.14 Oregon
• 7.14.1 Tax Credits
• 7.14.2 Grants
• 7.14.3 Production Incentives
• 7.14.4 Loan Programs
• 7.14.5 Rebate Programs
• 7.14.6 Net Metering
• 8. Company Directory
• 9. Acronym and Abbreviation List
• 10. Table of Contents
• 11. Table of Figures
• 12. Scope of Study, Sources and Methodology, Notes
• List of Charts and Figures
• Cumulative Installed PV Capacity, World Markets: 2003-2015
• Percentage of Installations in Rebated Areas, United States: 2008
• Major Private Equity and Venture Capital Players by Transaction, United States: 2008
• Expected Unlevered Internal Rate of Return by State, United States: 2009
• Levelized Cost of Energy Comparison, United States: 2009
• Spot Polysilicon Prices, World Markets: 2008-2010
• Polysilicon Consumption, World Markets: 2006-2010
• Spot and Contract Polysilicon Prices, World Markets: 2008-2010
• Polysilicon Supply Projections by Producer Experience, World Markets: 2005-2012
• Wholesale Module Prices, United States: 2004-2009
• Average Residential Cost per Watt by Region (Includes Installer Markup), United States: 2008
• Cell and Module Margins, World Markets: 2008-2009
• Average Installed Price by State, United States: 2008
• Residential and Non-Residential PV Consumption, United States: 2002-2006
• Annual Electricity Sales by Sector, United States: 1980-2030
• Residential and Non-Residential PV Installations by State, United States: 2008
• Preferred Method of Payment by Region, United States: 2008
• Value of Premium on Aesthetic Appearance, United States: 2008
• Importance of Cell Efficiency to Customers, United States: 2008
• c-Si and Thin-Film Market Share, World Markets: 2006-2015
• Approximate Cell Efficiency by PV Technology, World Markets: 2008
• Average Installation Size by State, United States: 2008
• Share of Competing PV Technologies, World Markets: 2008
• Installed Capacity, World Markets: 2008
• Annual PV Market Growth, United States vs. All Other Regions: 2006-2015
• Major Market PV Share, United States, Germany, and Spain: 2006-2015
• Solar PV Installations by State, United States: 2007-2008
• PV Company & Employment Growth, United States: 1998-2007
• Stimulus Bill Breakdown for Energy Spending, United States: 2009
• Share of Electricity Generation by Petroleum, United States: 2008
• Solar Energy System Incentive Program, Florida: 2009
• Xcel Renewable Portfolio Standard Schedule, United States: 2011-2020
• Map of Renewable Portfolio Standards, United States: 2009
• Map of RPS with Solar Provisions, United States: 2009
• U.S. Department of Energy Loan Guarantee Breakdown – Round 2, United States: 2009
• Electricity Generation by Fuel Source, United States
• Major Feed-in Tariffs by Selected County: 2009
• Significant State Rebate Programs
• Gainesville Feed-In Tariff Schedule
• CT Solar Lease Payment Program
• Washington Solar Loan Programs
• List of Tables
• Cumulative Installed PV Capacity, World Markets: 2002-2015
• Major Feed-In Tariffs by Selected Country: 2009
• DOE Loan Guarantee Breakdown – Round 2, United States: 2009
• Major Private Equity and Venture Capital Players by Transaction: 2008
• State by State Internal Rate of Return, United States: 2009
• Renewable Energy Consumption, United States: 2008
• Cell and Module Margins, World Markets: 2008-2009
• PV Market Forecast by Country/Region, World Markets: 1996-2015