Solar Industry Update David Feldman National Renewable Energy - - PowerPoint PPT Presentation

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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

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10 20 30 40 50 60 70 2008 2009 2010 2011 2012 2013P 2014P 2015P PV Annual Installations (GWDC) Europe ROW India Japan China U.S.

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10 20 30 40 50 60 2013P Old 2013P New 2014P Old 2014P New 2015P Old 2015P New PV Annual Installations (GWDC)

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

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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

10 20 30 40 50 60 70 80 90 2008 2009 2010 2011 2012 2013P 2014P 2015P Module Capacity (GW) Thin-Film Mfg. Capacity c-Si Mfg. Capacity Global Installation Additions

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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Graph and analysis courtesy of Carolyn Davidson, NREL, using data from California Solar Initiative database March 2013 (unpublished).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

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First Solar 2017 Roadmap

Sources: Corporate public filings

First Solar plans to cut their costs nearly in half in the next four years, again

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SunEdison 2016 Roadmap

SunEdison targets similar cost to First Solar

Sources: Corporate public filings

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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)

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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 $7 System Price ($/W)

Residential Systems

Price Range Typical Price

$2.19 $4.81 $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 System ASP ($/W)

System Pricing: California vs. Germany

Germany PV, < 10 kW California PV, < 10 kW

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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 $7 System Price ($/W)

Commercial Systems

Price Range Typical Price $0 $1 $2 $3 $4 $5 $6 $7 System Price ($/W)

Utility-Scale Systems

Price Range Typical Price

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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 1,315 725 832 200 400 600 800 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 Quarterly PV Installed (MWDC)

U.S. PV Installations by Market Segment

Utility Non-Residential Residential

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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.

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

% of Capacity Installed Installed Price ($/W) New York & New Jersey

% of MW's installed, NY % of MW's installed, NJ Cumulative Distribution, NY Cumulative Distribution, NJ

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

% of Capacity Installed Installed Price ($/W) Massachusetts

% of MW's Inst., H.O. % of MW's Inst., 3rd-party

• Cum. Distrib.,

H.O.

• Cum. Distrib.,

3rd-party

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

% of Capacity Installed Installed Price ($/W) Arizona % of MW's installed Cumulative Distribution

3rd-party skew

Majority of state 3rd-party

• installs. Value

Pricing or standard install?

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

% of Capacity Installed Installed Price ($/W) California

% of MW's Inst., H.O. % of MW's Inst., 3rd- party Cumulative Distrib., H.O. Cumulative Distrib., 3rd-party

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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 % of Installed Capacity

Residential Systems

AZ CA MA 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2008 2009 2010 2011 2012 2013 YTD % of Installed Capacity

Commercial Systems

AZ (0 kW - 25 kW) AZ (25 kW - 2 MW) CA (0 kW - 25 kW) CA (25 kW - 2 MW)

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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
• f American Electric Power, in an interview.” But on the other hand we see it as an opportunity because
• ur 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).

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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 $300 Feb-08 Jul-09 Nov-10 Apr-12 Aug-13 Dec-14 PPA Price ($/MWh) Signing Date

*

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>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

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>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

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>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

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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 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)

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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 2 4 6 8 10 12 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 Cumulative PV Capacity (GW)

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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

50 100 150 200 250 300 350 400 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 RPS Compliant TWh East Coast Midwest West TX CO AZ NM NV CA

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David Feldman

Senior Financial Analyst National Renewable Energy Laboratory 202-488-2231 david.feldman@nrel.gov

Thank You