Key player snapshot: The market for utility scale solar photovoltaics

20 December 2011 (Last Updated December 20th, 2011 18:30)

Optimism in the solar photovoltaic market has seen a boom in the uptake of utility scale installations of 1MW or more. Using detailed GlobalData market research, Power Technology reports on the market for these installations across three key countries - India, the US and Italy.

Key player snapshot: The market for utility scale solar photovoltaics

A utility-scale solar plant is defined as a large scale facility with installed capacity more than 1MW, from which energy is produced which the utility purchases and then distributes to customers.

The significance about these installations is that it is growing, significantly, as the global solar PV market becomes optimistic about the technology.

"A utility-scale solar plant is defined as a large scale facility with installed capacity more than 1MW, from which energy is produced."

The uptake of utility-scale installations is expected to accelerate, particularly in regions of higher solar irradiance. The falling installation costs, adequate government support and proper financing will drive the global utility-scale solar PV market.

In the year 2010, the residential and the commercial market segments accounted for a major share of the global installed capacity. However, the scenario is expected to change over the next five years.

By 2015, the significant capacity will come from utility-scale installations. Improved economics of PV projects, strong government support, declining PV module prices and major module manufacturers expanding their activities to downstream solar project development are the key factors that will drive the utility-scale PV market.

There is also an increasing interest in the large, ground-mounted solar PV systems that offer higher generating output than residential and commercial systems. As generation costs continue to fall, the utility-scale PV market will emerge as the largest and most stable demand segment.

The expected growth of the utility-scale market in future years has resulted in manufacturers, developers and financiers all seeking innovative products, structures and strategies to fit this market need.

Trends in three of the top countries

The US

The US occupies fourth place in terms of cumulative solar PV installed capacity in 2010, only after Germany, Italy and Japan. Until now, Europe had been the centre of activity for many utility-scale solar projects due to its feed in tariff programmes and strong government support.

Nevertheless, the utility-scale solar energy farm projects in the US are beginning to gain momentum. In the year 2010, the residential solar PV market accounted for around 25% of the total installed capacity of the US and the commercial solar PV market represented about 30% of the total US market size of 910 MW.

In the present scenario, it is the residential and commercial solar markets that have a big share of the total installed capacity in the US. Utility-scale solar is a relatively new phenomenon in the US.

However, it is expected that utility-scale solar has the potential to take over the US solar market. The utility-scale solar PV installed capacity in the US was around 242 MW in the year 2010. The growth is attributed to the 50% fall in the price of photovoltaic modules since 2009 as well as state Renewable Portfolio Standards (RPS).

An RPS with a solar provision mandates the utilities to obtain a certain percentage of their electricity from solar power, increasing over time. Hence many of the utility companies in the US are seeking large-scale PV projects.

Over the next five years, the utility-scale market will gain market share over the residential and commercial sector in the US. The US utility-scale PV market is expected to grow from $1.2 billion in 2010 to $7-8 billion by 2015.

It is expected that the utility-scale solar PV installed capacity will grow from 242 MW in the year 2010 to 2,000 MW in the year 2015 at a CAGR of 52.5%. California remains the largest market, where the state's three big investor-owned utilities hold contracts for 78% of the nation's 5,400 MW pipeline of projects.

With strong incentive schemes and government support, the US is likely to see major a utility-scale PV growth market. As the utility-scale market is set to grow continuously, solar PV will become an alternative, be it on a smaller scale, to natural gas plants and other peak electricity generators the US.

India

India is among the highest solar irradiation-receiving regions. The national policy for solar over ten years shows a strong commitment by the Indian Government.

The country is behind the US and Italy. The Indian solar PV power market accounted for 0.73% of the global solar PV market in 2010. In 2010 the utility-scale capacity was 35 MW and it is expected to increase rapidly in 2011 and 2012 due to a new plan being implemented by the Indian Government.

The National Solar Mission plans to achieve rapid growth by promoting utility-scale solar PV power plants to reduce the cost of solar PV technology.

As part of the National Action Plan, it aims at 20 GW of solar power by 2022 from different solar technologies. The main objective is to make solar power cost competitive in comparison with fossil fuels. Thus this mission is expected to spur the domestic manufacturing of solar PV equipment in India.

The growth in the installed capacity in India is driven by financial incentives provided by the government. These are expected to drive the Indian utility-scale PV market growth from 35 MW in 2010 to a cumulative capacity of 627.2 MW by 2015 at a CAGR of 78.1%.

Italy

Italy stands as the world's second largest PV market in the year 2009, next to Germany. The Italian market has been booming in the past few years despite the feed-in tariff cuts.

The high growth rate is a direct result of the attractive incentive schemes, falling module prices, comparatively higher electricity prices and good climatic conditions in the country. The Italian Government's robust feed-in tariff has spurred the market growth, thereby attracting the attention of various local as well as international PV developers.

"The uptake of utility-scale installations is expected to accelerate, particularly in regions of higher solar irradiance."

The Italian solar PV market is majorly driven by residential and commercial market segments. The high growth rate is the direct result of the '10,000 Tetti Fotovoltaici' programme and the first 'Conto Energia' (Energy Bill), providing incentives for facilities between one and 1,000kW.

The utility-scale solar PV market segment has started to catch up over last two years. In the year 2010, the utility-scale solar PV installed capacity in Italy accounted for 823 MW.

The growth in installations is attributed to the 'Third Conto Energia', a decree by the Italian Government to provide incentives for solar photovoltaic systems for various sizes of solar PV plants.

From June 2011 FITs cuts would again be implemented and adjusted according to those of the other European nations. Hence it is expected that the utility-scale solar PV installed capacity in 2011 would reach as high as 1,000 MW as there would be rush for installations.

With further digressions in the feed-in-tariffs it is expected that the utility-scale solar PV installed capacity would reduce in the years to come. By 2015, utility-scale solar PV annual installation is expected to reach 600 MW.

More details on the full GlobalData report.

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