Where the sun doesn’t shine

Author: Velocity Suite Power Plant Analyst

Solar Market Success Beyond the Desert Southwest

Last summer, I took a trip from Denver to Asheville NC to visit my mother. As my flight completed its descent into the Charlotte-Douglas International Airport, I was struck by the number of solar panels I could see glinting in the late afternoon sun. Later, on our drive from the airport to Asheville, my family pointed out another large solar farm as we passed it – I was already familiar with many of these projects. As a power analyst specializing in New Entrant projects, I have followed their progress from my desk in Boulder. Of course, seeing a landscape full of solar panels was very different from simply monitoring them.

When most people think of large solar markets they think of vast solar fields in desert states with lots of available sunlight. It is true that California and Arizona top the list of installed megawatts of solar power. However, according to a recent Solar Energy Industries Association (SEIA) Solar Market Insight 2013 Q3 report, New Jersey, North Carolina and Massachusetts rank 3rd, 4th and 5th, respectively. These are not desert states, and they have relatively little available sunlight. Below I’ve mapped total installed solar capacity by state over the Solar Direct Irradiance layer in the Velocity Suite. Pink circles represent the top 5 markets. Noticeably, available sunlight isn’t the only deciding factor for a growing solar market.

Solar Capacity By State Map2

In fact, according to the annual NPD Solarbuzz market report, North Carolina jumped to 2nd place ahead of Arizona for new solar installations completed in 2013. When I charted new installations for this period in Velocity Suite, Arizona still ranked 2nd, followed by North Carolina, Massachusetts and New Jersey.

Solar Installations Completed in 2013 Chart2

The reason for the difference between the Solarbuzz data and the Velocity Suite data is that Arizona had more large solar installations (>1 MW) while North Carolina had more residential and distributed systems. Velocity Suite focuses on utility-scale projects and only tracks projects greater than 1 MW. Although, the National Renewable Energy Laboratory Open PV Project website indicates 977.42 MW of currently installed capacity in New Jersey, 541.51 MW are from projects having less than 1 MW of capacity.

Historically, state incentive programs have been one of the major deciding factors in a growing solar market. According to an article in Renewable Energy World, “Federal tax credits and cash grants are an important financial component of most installations.” Most solar projects are built in states whose solar policies include financial rebates and state renewable portfolio standards. In some cases, this has resulted in an oversupply in some markets where, as solar costs decline, so too do credit-based incentives. This, in turn, lessens solar’s cost advantages when compared with alternative energy sources.

According to the SEIA, past residential and commercial solar markets have been capped by the availability of state- and utility- level incentives, but solar has now become cost-effective in some markets with only the federal investment tax credit (ITC), accelerated depreciation and net metering. The ITC is in place through the end of 2016 and PV system prices continue to fall each quarter.
I charted new solar in development by state, capacity and year in the Velocity Suite. California still dominates planned utility-scale development, followed by Arizona and North Carolina – New York has moved into fifth place.

Planned Solar Capacity Chart2

According to a recent report by Greentech Media, some overlooked solar markets that are expected to take off in the near future are Georgia, Minnesota, Washington DC, Louisiana and Virginia. Greentech says that “Georgia might have the most potential demand; the most attractive market might be Washington, D.C. with its aggressive solar renewable energy certificate prices; the “best value proposition” is the Minnesota small-scale distributed generation market with its guaranteed demand and known Performance Based Incentive.” Recently, a federal judge in Minnesota concluded that Xcel Energy should invest in large solar power projects instead of natural gas generators because the solar power arrays would offer ratepayers a better deal (CleanTechnica). Greentech & SEIA agree that these new solar markets will consist of much more distributed generation than past markets.

The above illustrates that a growing solar market is not necessarily dependent on available sunlight. Although sunlight encourages advantageous solar policies in California and Arizona, states in Northern climates with less sunlight have solar markets that rival most Western and Southern states. Sunlight is essentially limitless, regardless of how much direct solar radiation is available in any given area. Solar power is only limited by the systems used to collect and distribute it. From a business standpoint, a growing solar market is driven by how market conditions such as demand, policy and regulation affect the profitability of installing and maintaining those systems.


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