The amount of electricity generated by U.S. utility-scale solar photovoltaic power plants is up more than 100 percent in 2014 over the same period in 2013, thanks to big projects, many of them highly productive, that have been coming online.
Four major factors have made the solar surge possible: The eight-year extension of the Investment Tax Credit for renewable energy that was part of the 2008 Bush economic bailout package; state renewable portfolio standards; the Obama administration’s pro-solar policies, including friendly environmental reviews, cash grants in lieu of tax credits and guaranteed loans; and the steep decline in the price of PV.
Through September, utility-scale solar had sent 12,303 gigawatt-hours of electricity to the U.S. grid (actually a collection of grids), compared to 6,048 GWh in the same period in 2013, according to the U.S. Energy Information Administration. That was enough to meet the electricity needs of 1,513,703 average U.S. homes, and represented about 0.4 percent of the nation’s electricity. With continued growth and adding in commercial and residential PV as well as concentrating solar power, solar electricity could easily account for 1 percent of U.S. generation by the end of this year.
That might sound like a relatively small amount, but as recently as 2008 solar was at virtually zero – and the steep ramp-up makes solar advocates optimistic that big gains could be realized in the coming years.
In late November, a report from the group Environment America made the case that the U.S. could and should set a goal of “obtaining at least 10 percent of its electricity from solar power by 2030.” The group said to accomplish that, solar capacity would need to grow at an annual rate of 22 percent between 2013 and 2030 – slower than what has been seen in recent years.
“Given the growth of solar over the last few years, getting to 10 percent of U.S. electricity from solar should happen far sooner than 2030,” SunEdison founder and clean energy entrepreneur Jigar Shah said in a statement released with the report.
Potential hurdles are out there. Under current law, the federal tax credit now valued at 30 percent of a project’s cost falls to 10 percent for projects put in service after 2016. In a number of states, too, utilities have met or are close to meeting their renewable energy requirements under renewable portfolio standard laws. In addition, solar advocates and utilities are increasingly at odds over how to value “customer-sited” solar; evolved business models for utilities could be necessary to make the 10 percent solar goal a reality. Some solar developers also say duties on solar products from China and Taiwan could slow growth.
Perhaps the biggest point of uncertainty is the fate of the Obama administration’s proposed Clean Power Plan, which will force states to trim existing power plant carbon emissions. If implemented as planned, it would drive more solar-friendly policies.
Still, on price alone solar figures to be a growing part of the energy picture.
According to research by the Berkeley Lab, “The price of electricity sold to utilities under long term contracts from large-scale solar power projects has fallen by more than 70% since 2008, to just $50/MWh on average within a sample of contracts signed in 2013 or 2014 and concentrated among projects located in the southwestern United States.”
The performance of the PV plants backed by the Obama administration should give investors confidence that production targets can be met. Take the case of California Valley Solar Ranch, owned by NRG Energy and built using SunPower technology. On the broad, sunny Carrizo Plain in inland San Luis Obispo County, the 250-MW plant was expected to produce 662,000 MWh of electricity annually, on average, for buyer Pacific Gas & Electric. In fact, in its first full year of operation – the 12-month period through September 2014 – it generated 697,759 MWh, according to EIA data.
California Valley Solar Ranch cost $1.6 billion to build, with $1.2 billion coming through the U.S. Department of Energy’s 2009 stimulus-enhanced guaranteed loan program. But that same plant today would certainly be less expensive, perhaps dramatically less expensive. For example, a nearly identical plant proposed to be built about 100 miles north of California Valley Solar Ranch – it would be 247 MW in size and produce 666,000 MWh annually, according to a power purchase agreement [PDF] with Southern California Edison – will reportedly cost $600 million.
