The US utility-scale solar landscape


Alexander Von Welczeck has his fingers in a lot of solar pies. Currently serving as director of Solar Land Partners Inc., and a principal at both Clean Power Group and Clean Power Advisors LLC, his mission is to develop "meaningful, world-class" photovoltaic plants in western America.

While he also provides advisory services to a host of clean tech companies, many know him for his work in the field of power purchase agreements (PPAs). Indeed, in 2007, he founded Solar Power Partners, which is credited as being one of the pioneers in solar PPA development.

Next week, he will be conducting a "Dos and don’ts of large-scale solar" workshop at PV Power Plants – USA 2011, organized by Solarpraxis and scheduled to be held from November 30 to December 1, in Phoenix, Arizona.

During the event, he will cover a plethora of pertinent solar issues, including: land acquisition, entitling and permits; interconnection, engineering, procurement and construction (EPC); and PPA and project financing.

Before that, however, he talks to pv magazine about the utility-scale solar in the U.S. market.

How is large-scale solar defined?

There is no hardline definition as it depends upon the geographic region, competitive environment, transmission access and other project characteristics. Nonetheless, in general, in the USA, you can say projects over 50 megawatts (MW) are considered large-scale solar.

How long does it take to obtain all the necessary paperwork for a project?

In order to fully permit and obtain all entitlements, from project inception to NTP "shovel ready", one should estimate three years.

What are the key considerations when selecting a site?

All critical path elements are equally important, as the total development is only as strong as its weakest link. In other words, if one critical element, for example, environmental impact, fails, then the entire project fails.

What is the timeframe involved in taking a project from conception to completion?

In general, a schedule of 3.5 to five years, made up of about 2.5 to 3.5 years for project development, plus another one to two years for EPC build-out.

How have installation costs been affected this year?

We have seen significant decreases in EPC costs over the past 18 months, driven primarily by much lower photovoltaic panel prices. The larger, over 50 MW projects benefit from even larger economies of scale, currently allowing for all-in EPC costs of between USD$2.40 to 2.90 per watt AC.

What are your thoughts on the new announcement by Ken Salazar to identify solar energy zones in six U.S. states?

It may be too little too late. There are already many large utility solar projects under development across the U.S., with a significant clustering in the high, direct normal insolation (DNI) southwest that will more than satisfy current statewide renewable portfolio standard (RPS) requirements. If the Federal Government could pass a national RPS, which would create better solar market conditions in high DNI states like Utah, Nevada, Texas, Arizona and more, then these new Federal solar zones could become interesting.

What is the average timeframe for obtaining an interconnection agreement (IA)? What are the obstacles?

The American transmission landscape is very fragmented. Obtaining an IA differs from state to state, and there are even different processes by different Balancing Authorities within the same state. A typical timeframe from Interconnection Request (IR) to Interconnection Agreement (IA) can be two to three years.

What are the hurdles for an EPC contractor?

From the project developer perspective, there are few EPC obstacles, with many choices for hiring quality EPC construction companies. The primary obstacle is to ensure the EPC contractor can provide performance guarantees that are bankable.

What is the key to being a successful EPC contractor? Who are the biggest players in the U.S. market?

The most successful EPC construction companies tend to be regional businesses that are directly accessing quality local labor, and eliminating middle-men mark-ups. The top players from the East Coast to western USA are mostly different. We are seeing many different types of contractors newly entering the solar EPC business, from premier general contractors like Swinerton, Turner, and Mortenson, to leading electrical contractors, like Cupertino Electric and Rosendin Electric, to global infrastructure builders, like Bechtal and Flour, to varied international enterprises from Germany, Spain, Korea, Japan and more. The international enterprises often combine their EPC services with an in-house proprietary photovoltaic product.

What is the current project financing landscape like? In which states or regions is it easiest to secure funds?

All project financing in the USA is complex. There is no, or little, difference on a state by state basis. The first step is to secure project development equity. For a large scale over 50 MW project, typically over $5 million in development equity is required to fully develop to NTP shovel ready.

As the project is now bankable, project ITC tax equity, debt leverage and project equity is readily available by many different banks and private investors, both domestic and from abroad. The ITC tax equity players are mostly large U.S. banks and insurance companies, but we are seeing recently more corporate entrants, including Google and Chevron. Most recently, we have seen a wave of investment from China into the U.S. utility solar project financing market.

Overall, which states or regions are the most desirable for large scale solar projects?

California remains the most attractive state for large scale solar, due to the large market size, the financial quality of investor-owned utility (IOU) power off-takers, the attractive PPA rates, including time of day (TOD) and higher solar DNI. And now, with the new law SBX1-2, 75 percent of all RPS qualified renewable energy needs to be produced within California, not from out of state.

Finally, what are the biggest hurdles to implementing a large-scale solar project in the U.S.?

Successfully completing the highly complex and risky project development phase.

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