Q2 surge in utility-scale solar a hopeful sign for the future

By Ryan Edge and Nick Esch

Following a slow start to the year, utility-scale solar surged in the second quarter of 2015, and the pipeline continues to grow ahead of the investment tax credit (ITC) step-down scheduled for 2017, according to research compiled by the Solar Electric Power Association (SEPA).

The 30-percent federal ITC will be reduced to 10 percent for commercial solar projects, but zero out completely for residential solar as of Jan. 1, 2017.

Twenty-one projects came online between April 1 and June 30, totaling 518.9 megawatts (MW) of new solar capacity, a significant rise from the 13 projects and 213.3 MW completed in the first quarter of the year. This growth is expected to accelerate, with record amounts of new solar capacity under construction and a jump in new capacity announcements after three quarters of declining numbers.

In the second quarter, developers announced plans for more than one gigawatt of additional new solar capacity. Nine projects totaling 369.2 MW broke ground and are under construction, more than doubling the 179.9-MW capacity of the five projects that broke ground in Q1.

This new construction brings the total pipeline now being built to 7,024.1 MW. Ninety-seven percent of the current construction pipeline — 6,800 MW — is scheduled to be completed before the ITC steps down to 10 percent in 2017. After that, only one project currently under construction is scheduled for completion, while eight others have no specified completion dates.

Figure 1. U.S. utility-scale solar market growth, new and
cumulative capacity in MW. (Source: SNL, SEPA Research)

Of the 14 projects announced in the second quarter, totaling 1168 MW, only one is scheduled for completion beyond the ITC step-down and three others are unspecified.

If the step-down to a 10-percent ITC occurs as scheduled, more emphasis will be placed on supply-side efficiencies — in manufacturing, development, and engineering and construction, as well as financing and other soft costs — to help maintain a pipeline of utility-scale projects.

Figure 2. Q2 utility-scale solar market outlook

Completed projects

California led both in number of completed projects and in new capacity in the second quarter. The final 49 MW of the 579-MW Solar Star facility came online, making the project the largest solar power plant in the world ahead of both the Topaz and Desert Sunlight projects, which are each 550 MW. Altogether, California’s 12 new projects contributed an additional 445 MW to the state’s portfolio.

Following California yet again, North Carolina scored five new completed projects totaling 34 MW. The state has had at least one utility-scale project come on line in every quarter since the second quarter of 2011.

Find the Top 10 solar states and utilities in SEPA’s 2014 Utility Solar Market Snapshot here.

Single projects were completed in four other states, as shown in the table above. The single megawatt added in Arizona was a new phase of a 5.7-MW system installed at Arizona Western College in Yuma.

As expected, most projects completed in the second quarter have negotiated power purchase agreements (PPAs) with utility offtakers. Notable exceptions include First Solar’s Barilla Solar Plant, a merchant power plant selling output into the ERCOT market in Texas. The final 12 MW at Barilla brought the project total to a nameplate capacity of 30 MW.

In Nevada, the Ft. Churchill Solar project has begun supplying 19.9 MW to an Apple data center in Yerington. Also, Marin Clean Energy, a community choice aggregator supplying renewable energy to retail customers in two counties and four cities in Northern California, is the offtaker for two projects totaling 23 MW, both located in the state.

Projects under construction

California also leads in this category, with nearly 4,000 MW underway in the second quarter, representing 55 percent of all such projects nationally. Nevada and Utah follow with 749.5 MW and 661.3 MW respectively. Utah’s construction queue adds up to 17 times its current solar capacity, putting it in line to become one of the top 10 solar states.

Steady growth in utility-scale solar is expected to continue in North Carolina with 30 projects under construction and three more recently announced, some ranging from 20 to 100 MW. Previously, utility-scale projects in the state were predominantly around 5 MW, qualifying for the state’s attractive PURPA standard-offer PPA. Other large-scale solar projects underway in the eastern U.S. are spread from Georgia to Connecticut.

Surprisingly, Arizona, the state with the best solar resource in the nation and the second highest installed solar capacity, has seen utility-scale activity taper off. It now ranks fifth for utility-scale solar project construction behind North Carolina.

Announcements

The largest of the 14 new projects announced in Q2 is SolAgra Corporation’s Ryer Island Solar Farm in Solano County in Northern California. To be built in phases, beginning with a 1 MW demonstration plant, the project could top out at 720 MW, which would make it the largest solar farm in the U.S. Project information on the company’s website also includes plans for a compressed-air energy storage facility — with a capacity of 160 to 480 MW– to be developed using a depleted natural gas well.

Connecticut has entered the utility-scale solar market with the announcement of two projects, one 80 MW and a second 20 MW, both due to be completed by December 2016. Both projects are being built by Allco Renewable Energy, the 80-MW plant in Bozrah and the 20-MW facility in Waterbury. Connecticut Light and Power will be the off-taker.

Track utility-solar projects across the nation with SEPA’s Utility Solar Database here.

These two plants alone will nearly double the state’s installed capacity, which was 108 MW as of 2014, according to SEPA’s Utility Solar Market Snapshot.

Of all the new projects announced in the second quarter, one project in Mitchell, Georgia has a name that reflects the generally optimistic outlook for the future of the utility-scale market. The 24.9-MW Hopeful Solar project — in development by Capital Power, a Canadian firm — is scheduled for completion a full year after the ITC step-down.

Disclaimer

This analysis by the Solar Electric Power Association (SEPA) draws on primary data from SNL Energy and independent sources. SEPA’s quarterly or annual totals may differ from other sources for a variety of reasons. All SEPA megawatts are utility-compatible grid capacity (AC); SEPA’s totals also include only projects 5 megawatts or greater. Project announcement, construction and completion dates can be interpreted differently and assigned to differing quarters or years. Updates or corrections are welcome; send to [email protected].

Ryan Edge is a research analyst at SEPA and can be reached at [email protected]. Nick Esch is a SEPA research associate and can be reached at [email protected].