Intersolar opens on positive note, but there are clouds on the horizon

Fronting an audience of over 2000, which included state senators, researchers and renewable industry practitioners from around the world, Intersolar North America Conference Chairman Eicke Weber opened the latest instalment of largest solar energy conference franchise in the world with the similar upbeat messages as the previous conference in Munich.

The big messages continue to focus on growth in the renewable energy industry generally, underpinned by further upswings in wind and solar energy. All indicators for role of sustainable energy in meeting developing energy needs in India, China and the MENA (Middle East and Northern Africa)countries – which as a group were responsible for the lion’s share of the 37.6 GW increase of installed solar PV worldwide in 2014 – show continued momentum,  despite clear signs of slowing from the incentive-fuelled pace of Europe and the U.S. In addition, Island nations and isolated energy systems in Africa and the Pacific  remain a growth target for sustainable energy, as the cost and environmental impact of transported gas and diesel makes solar attractive.

The other growth message related to the continually-falling cost of solar energy. Weber presented an ISE study predicting solar PV energy to fall to a median less that 6 cents per kilowatt hour in the next five years, headlined by the ‘sun-rich’ countries of North America, Australia, India and MENA.

A preview of Berkeley Labs’ Tracking the Sun 2015 reports prices falling another 9% in the U.S. to around $4.30 USD per watt installed for residential applications, and $2.80 USD per watt for utility-scale installations. Whilst small-scale rooftop solar remains the thin slice of the U.S. Solar capacity pie, the median capacity of residential rooftop systems is now above six kilowatts. With worldwide solar panel production now stabilised after the rationalisation of manufacturing in 2012 that saw a number of panel manufacturers close their doors, the continuing slide in prices is credited to the improvements in the production and application of inverters and racking, as well as the reduction in the ‘soft costs’ as approvals, connection assessments and installer accreditation become mainstream.

With 8 gigawatts of installed solar PV in the U.S., renewables are credited as playing a major part in helping California weather the drought, as hydro energy sources fall to 18%. Many parts of South America, in particular Brazil, are looking at solar to ease concerns as that country’s water shortage is brings rolling blackouts, rationing and a 30% rise in energy rates off the back of hydro dam levels down to 18%.

California’s mantle as the progressive solar state is being matched by the work being done in the state of New York, under the governor Cuomo’s ground-breaking REV (reforming the Energy Vision) programme. A number of states continue their local incentive and change programmes, such as a number of eastern states lifting their net metering caps for commercial and industrial customers from lows of 3%. The 3- stage REV initiative, however, is somewhat unique in bringing clear incentives to the traditional utility providers to participate in the transformation.

It is not all rosy, however. In an environment that parallels the changing settings of Germany’s energiewende and Australia’s recent directive to the CEFC regarding support to solar generation, direct government support to renewable technologies is fading worldwide, particularly in countries where solar is now well established.

There is an undercurrent of concern in the solar industry. Despite every second delegate having ‘sustainable’ somewhere in their job title, and many presentations highlighting what is ‘about to happen’ for so many reasons, the industry remains unable to break free from many subsidies in the form of tax credits, feed-in tariffs and mandated renewable targets.

In the U.S., the conversation is all about a number of significant and concurrent shifts in the renewable landscape.

Firstly, the rapid expansion of gas availability in the U.S., with a fall in spot prices by 43% in the last 12 months as an indication, has slowed the solar water heating market.

Secondly, calls to reduce mandated caps for net feed-in energy and the stability of RPS (Renewable Portfolio Standards) are getting louder, particularly in those those states where low levels of political commitment to climate change are occurring, such as Florida.

The pressure on a review of net metering continues. Despite most utilities being relatively unaffected commercially by the changing volumetric-based revenue streams for residential and commercial customers to date, they are very aware of the path that the growth of solar and net metering will lead. With utilities in Arizona and Nevada leading the anti-net metering drive, many solar advocacy groups are quietly acknowledging that the retention of ‘NEM 2.0’ in many of the 43 states that currently have an existing net metering policy will only take place if the advocates offer a trade off and ‘take a haircut’, reducing their opposition to the utilities’ current work on tariff redesign.

For example, in a move seen as a very ‘solar-unfriendly’ by solar advocates, PG&E are planning in 2019 to transition from the existing 5-tier inclining block rates to a 3-tier structure that includes a minimum monthly bill and a ‘Super user’ top tier that will see rates rise significantly for the 2-10 percent of energy users.

The pervading discussion, however, is the looming 2016 review of the 30% ITC, or input tax credit which was established by the federal government in 2009. This credit mechanism has underpinned the financial viability of an estimated 80% of utility-scale solar PV investments in the U.S. Despite a permanent establishment of the ITC being publicly supported by President Obama, there is concern that the President’s budget is likely to face opposition from Republicans, who now control the Senate and the House of Representatives. Predictions range from a collapse of future large-scale PV projects to a scenario where state governments will pick up the sustainable shortfall, most likely with the support of a new EPA legislation.

At the least, there is currently a rush to get the large – scale solar plants off the drawing boards and commissioned before the end if 2016, guaranteeing a drop-off in project work thereafter.

And then there is storage … And tariff reform …. And Tesla’s JB Straubel’s slideshows of the gigafactory rising from the ground in Reno, and plans for the Tesla ‘model 3’. The trade show, expected to draw 20,000 solar PV industry people, opens tomorrow.

“Mike Swanston is Principal Consultant at the The Customer Advocate, a  company focussed on the needs, empowerment and benefit of energy customers.”