The Solar Electric Power Association‘s (SEPA) fourth annual Utility Solar Rankings report analyzes utility solar electricity markets in the United States, focusing particularly on the top utilities that are driving solar electric power growth. The SEPA Top 10 ranked utilities integrated 561 megawatts2 (MW) of solar electricity capacity in 2010, representing 100 percent growth over one year.
In addition to continued growth, the new report shows two dramatic changes taking place in utilities‘ use of solar power. The report demonstrates that more and more growth came from areas outside the traditionally strong solar regions of California and the Southwest. Many utilities in other parts of the country now have sizeable solar portfolios, and tens of thousands of photovoltaic (PV) systems were installed in nationwide. With a growing trend toward more utility-owned solar projects and third-party power purchase agreements (PPA), the industry is no longer based solely on customer-owned, net-metered systems.
Among the Report‘s key conclusions:
Utility solar electric markets continue to expand rapidly across the country. About 63 percent of the new solar capacity came from utilities outside California in 2010, the largest percentage on record. Seven of this year‘s Top 10 Solar MW utilities were from outside of California, and four of the top-ranking utilities were located in the Eastern United States. Solar power is becoming recognized as an important element in the energy supply planning and customer energy management of utilities nationwide.
Two new growth trends are changing the profile of solar electric power in the United States: centralized projects and utility ownership. Traditionally, solar markets have relied on distributed PV for most new capacity. However, centralized projects are gaining new traction—eight centralized projects greater than 10 MW each were installed in 2010. This included what are now the two largest PV projects in the United States—the 48 MW Copper Mountain project, in Nevada, with power purchased by Pacific Gas & Electric and the 30 MW Cimarron project, in New Mexico, purchased by Tri-State Generation & Transmission Cooperative Association.
The largest concentrating solar power (CSP) project in nearly 20 years was also installed in 2010. It is a hybrid CSP-natural gas facility owned by Florida Power & Light. Centralized projects totaled 226 MW in 2010, up from two projects totaling 46 MW the year before.
Thirty utilities reported owning 140 MW of solar, as opposed to purchasing the power from facilities owned by others. This utility ownership represents a more than 300 percent increase over the previous year. Based on future announcements and plans in both categories, both trends are expected to continue their growth and market penetration.
Individual utility solar portfolios reveal very different market dynamics and procurement strategies. Utility solar portfolios differ by project technology (PV or concentrated solar energy), type (distributed or centralized) and ownership (customer, third-party or utility). Some utilities are purchasing power from solar systems, such as rooftop PV, owned by their customers, while others are creating a solar electric market by procuring and/or owning large amounts of solar generation resources. Many are doing both. Like different investment portfolios varying in percentages of stocks, bonds and cash, the Top 10 utilities‘ cumulative solar portfolios reflect varying amounts of utility ownership, CSP technology and distributed PV, discussed in more detail in the full report. Solar portfolios vary from utility to utility because of different state policies, utility preferences, solar resources, electricity prices, incentives available and other factors.
This year‘s Top 10 report not only depicts a rapid rise in the amount of solar installed on utility grids, but a trend towards utility-led initiatives that is behind much of the expansion of the solar market. The remainder of the report includes discussion on the national rankings, including an analysis of the Top 10 cumulative utilities‘ solar portfolios, as well as rankings by region (west, central, and east) and utility-type (cooperative, investor-owned and municipal). Each rankings section includes detailed discussions about emerging trends in geographic diversity, project characteristics, technologies, and utility ownership.
The annual national rankings measure a utility‘s newly installed solar power and include photovoltaic and concentrating solar power technologies that were interconnected between January 1 and December 31, 2010. The data includes everything from distributed customer systems to wholesale contract purchases from independent power producers to utility owned projects. There are two rankings categories—Solar Megawatts (MW), which measure a utility‘s total solar capacity, and Solar Watts-per-Customer (w/c), which standardizes solar capacity by the size of the utility. SEPA awards the Top 10 utilities in these two categories at its annual Utility Solar Conference (USC). The 2011 USC will be held in July in San Diego, CA.
ANNUAL SOLAR MEGAWATTS
Pacific Gas and Electric (CA) (PG&E) installed 157 MW in 2010, which secured the top position in the annual solar megawatts rankings. PG&E‘s 2010 solar portfolio was about two-thirds distributed, customer PV projects, with more than 10,000 projects totaling more than 104 MW. PG&E also purchased the output of the new 48-MW Copper Mountain PV facility, the largest in the country. In contrast, Florida Power and Light (FL) (FPL), the second ranked utility, installed 87 MW, largely based on two utility-owned projects—a 10-MW PV project at the Kennedy Space Center and a 75-MW hybrid CSP power plant at a combined-cycle natural gas plant. Public Service Electric and Gas (PSE&G), of New Jersey, maintained its third place position in 2010 through a 75-MW portfolio, about 30% of it utility-owned and 70% customer-rooftop projects.
Tri-State Generation and Transmission Cooperative Association, in Colorado, was the highest ranked cooperative utility at sixth on the list, based on a power purchase agreement with the 30-MW Cimarron PV project. Other newcomer utilities to this year‘s Top 10 include Jersey Central Power and Light, ranked ninth after interconnecting 1,150 distributed systems in 2010, and Duke Energy Carolinas (NC), ranked tenth on the strength of two very different projects. Twelve megawatts of the 15.5-MW Davidson Solar Facility in North Carolina were completed in 2010, along with the deployment of more than 7 MW of utility-owned, customer-sited solar projects.
All but one of this year‘s Top 10 Solar Megawatt rankings were investor-owned utilities (IOUs), which may be a result of the larger average size of IOUs relative to municipal and cooperative utilities. The top ranked municipal utilities were CPS Energy, in San Antonio, at #11 and the Jacksonville Electric Authority (JEA), in Florida, at #13, both ranked after the completion of larger-sized PV plants under PPAs. After Tri-State G&T, the next ranked cooperative utility was Kauai Island Utility Cooperative in Hawaii at #52 with 0.8 MW.
The total annual capacity of the Top 10 utilities has grown exponentially over the past three years, rising from 167 MW in 2008 to 561 MW in 2010. This year‘s rankings required a minimum of 20 MW for an individual utility to rank in the Top 10. However, the Top 10‘s share of the overall survey capacity declined from 88% in 2008 to 72% in 2010, indicating a broadening of the market for utilities ranked 11 and higher.
Looking at geographic distribution, seven of this year‘s Top 10 utilities were from outside of California and four of the top ranking utilities were located in the Eastern region, both increases from prior years. Non-California states‘ share of the market has increased from 25% in 2008 to 63% in 2010. Overall, the U.S. solar markets are expanding well beyond California‘s borders.
As predicted in last year‘s report, 2010 was a growth year for centralized projects. In 2010, eight projects greater than 10 MW, totaling 226 MW, were completed, making up 29% of the market, versus three totaling 62 MW in 2009. This centralized trend in growth is expected to continue through 2011 and beyond, as 24 projects, each greater than 10 MW and totaling more than 1 GW, are already completed or currently under construction in 2011.
Beyond FPL‘s 75 MW Concentrating Solar Power project, the rest of the projects and megawatts in the Top 10 were all PV technology—87% of the total. These PV projects, which ranged in size from 1-kilowatt residential installations to 48-megawatt power plants, have much shorter planning horizons and project completion times, along with lesser siting, permitting, financing and transmission requirements at these small- and medium-sized scales.
However, larger PV and Concentrating Solar Thermal Power projects (those greater than 50 MW) require overcoming financing, siting/permitting, and transmission barriers that might emerge at these larger sizes. Concentrating Solar Power represents over 6,000 MW of the over 15,000 MW of future solar projects that SEPA is tracking, but there are differences in project development between CSP and PV. PV can be built and sub-sections of the larger project can be energized over time, resulting in lower construction risk and balance-sheet impact. Concentrated solar energy projects need to be completed in full before commissioning, a period which takes several years from start to finish.
Utility ownership was a new impact on this year‘s rankings. Thirty utilities reported owning 140 MW of new solar capacity, or 18% of the total market, up from an estimated 30 MW, which represented 9%, in 2009. The Top 10 ranked utilities owned 23% of their total annual capacity, with three utilities owning more than a third—Arizona Public Service, Duke Energy Carolinas, and FPL. While most utilities‘ future plans for ownership involve distributed projects, 2010 was the exception due to FPL‘s two large centralized projects. The utility ownership trend is expected to continue its growth, with at least 1,100 MW of announced utility-owned projects in the pipeline over the next few years.