By Dr. Chris Constantine, Oerlikon Solar

Dr. Chris Constantine, Director of New Technologies at Oerlikon Solar, sees the “U.S. poised to become number one solar market in the world by 2012.” Speaking before a packed audience at SOLARCON Korea in February, Dr. Constantine said the fastest growing PV segment will be the distributed generation utility segment (under 20MW) with new utility project models, growing financing support, and growing public policy support to help accelerate growth. Total US demand could reach as high as 4GW in 2012, dramatically up from the 2009 level of less than 700MW.

Key short term growth drivers include the Investment Tax Credit grants that provide a 30% refund (not tax credit) through 2010, the DOE energy loan guarantee program, expanded utility financing, and accelerated depreciation schedules The clearly optimistic 4GW upside scenario assumes continuation and expansion of state-level incentives, national Renewal Portfolio Standards (RPS) and accelerated investment recovery. In California, which comprises 60% of the U.S. grid-connected solar PV market, market drivers include the California Solar Initiative for systems less than 1MW in size, an increase in the RPS to 33%, expanded state FIT programs, and provisions that allow utility ownership and accelerated depreciation for solar. Constantine said that 29 states also have RPS, 16 with explicit targets or “multipliers“for solar and small-scale distributed renewables. Several states are considering additional RPS increases and FIT legislation.

Another important factor is that more states are adopting “time of use” electric rates for commercial customers which will result in utilities seeing higher value in procurement of PV electricity during high peak times. Utilities may also enter the commercial PV rooftop business, with new projects by Southern California Edison and others offering a glimpse into future business models. Other key drivers include the growth innovative financing such as PV system leases, PPA agreements for homeowners, and municipal financing (loans repaid through property tax).

Grid parity will be the mid-term driver of solar demand in the US as the cost of solar energy-generated electricity from residential photovoltaic (PV) panels becomes equivalent with the cost of electricity purchased from the grid in many areas of the country. Constantine showed National Renewable Energy Laboratory (NREL) data that show break-even conditions will exist for 67% of US residential electricity sales in 2015, given reasonable assumptions about the rising cost of fossil fuels, continued investment tax credits, and other factors. Increasingly, as power producers, financial institutions, installers, regulators, and other participants recognize that grid parity is on the horizon, market adoption of solar will rapidly accelerate.

Constantine sees utilities as the fastest growth sector, primarily those in states with strong RPS initiatives and high electricity rates. This segment opportunity will increase as solar PPA prices converge with wind and Natural Gas Turbine plants. The continued opposition to new transmission lines may impact Concentrated Solar projects more than PV. In fact, a market “sweet spot” for projects less than 20MW co-located with electric substations (no new transmission lines) are forming that will accelerate utility adoption.

Utilities can also be expected to develop new solar business models, including more utility Power Purchase Agreement (PPA) contracts with private developers, utility-owned PV projects with in-house or outsourced EPC contracts.

The California utility market is quickly developing. Currently there are 1.2GW in contracts for solar PV. The current California interconnection queue already exceeds 8.4GW. The fastest growing portion of this market will occur in DG projects less than 20MW. Black and Veatch estimates there are 27GW of potential in California in this size range alone.

The project construction will take a year, and six months later the first solar panels will come off the 90MW line. According to the announced plan, that will happen during the fourth quarter of 2011. There are plans to expand capacity up to 300MW as U.S. solar market will grow.

In conclusion, Constantine sees the US becoming the world’s fasted growing, with “enormous potential.” The fastest growth will occur on large projects with utilities becoming more active and developing new business models. Emerging grid parity will increasingly become the primary market driver, particularly in California, the South West, and New England, but that “technology innovation will be a strong catalyst”.

Chris Constantine is currently Director of New Technologies within the Solar Segment of Oerlikon Corporation. Chris graduated Magna Cum Laude with a B.S. in Chemistry from Fordham University in New York, completing a Ph.D. in Physical Chemistry from the City University of New York (C.C.N.Y.) and an M.B.A. from the Wharton School of Business. Chris has worked at Oerlikon for 23 years, has 48 Refereed Publications and 4 patents.

Chris has recently joined the Oerlikon Solar Team and will assume an increasingly active role within the New Technology Development group. He is currently responsible for evaluating Next Generation Thin Film Photovoltaic technology. Before the thin film industry, Chris served as an Officer within the US Navy Special Warfare and Submarine Services in various leadership roles.

PV Group, The Grid – March 2010