US must be looked at as a long-term growth market


American utilities aren’t shy about announcing big solar contracts and projects, but these announcements simply create an illusion that solar power plants will crop up quickly like weeds after a rainy day.

Consider this: only 160 megawatts (MW) of photovoltaic power plants are up and running today, Mr. Kann said. SunPower and First Solar together have 74 percent of the American utility market.

Both American companies have enjoyed the first-mover advantage and both have bought solar power project engineering firms several years ago to create sales for their solar panels. First Solar has amassed a fat portfolio of yet-to-be completed projects by buying OptiSolar for USD$400 million last year. Earlier this week, First Solar said it had completed the acquisition of Nextlight Renewable Power, another project developer, for USD$297 million.

More utilities are signing power purchase agreements or developing their own projects. Overall, they have inked 4.5 gigawatts (GW) of power purchase agreements and announced plans to buy or build another nine GW.

While the numbers are impressive, Mr. Kann cautioned that many of these projects are likely to be delayed or canceled. For example, a 30 MW project development in Austin, Texas, won’t start operating by the end of this year as planned. The project developer, Gemini Solar, is still completing an environmental report. Suntech Power formed Gemini Solar with MMA Renewable Ventures in 2008. MMA Renewable Ventures has since been sold to Fotowatio.

Unlike Germany and other European countries with feed-in tariffs (FITs), the U.S. lacks a national incentive program to promote solar energy development. Lawmakers have expressed reservations about creating a FIT program, given the dynamics of the country’s energy market. Power producers and retailers are mostly regulated by state governments or even cities. Some of these states and cities are likely to lobby against policies that they see as costly for their residents.

The top three utilities that have moved more aggressively in procuring solar electricity are located in California: Pacific Gas and Electric Co. (PG&E), Southern California Edison and Sacramento Municipal Utility District. California has long set loftier goals than other states when it comes to renewable energy consumption. The investor-owned utilities, such as PG&E and Edison, must buy enough renewable electricity to account for 20 percent of their power mix by the end of this year. The goal for 2020 is 33 percent.

Although municipal utilities do not have to follow the 2010 mandate, some of them have also set policies to buy or produce more renewable electricity. This trend isn’t just happening in California. Aside from the Sacramento utility, Mr. Kann cited Jacksonville Electric Authority in Florida and Austin Energy in Texas as two other examples.

“We are standing at the door step of the utility scale market in the U.S.,” he said.