The good news? "Significant cost reductions are possible," the
report adds, "and some believe that solar power will have a bright
future in a world in which environmental, security, and supply
constraints could dampen interest in conventional generation."
"Local, state and federal government incentives are (and will continue
to be) the principal drivers for the recent growth in grid-connected PV
capacity," the report states. Programs include rebates on the capital
cost of the installations, high fixed tariffs paid for PV supply, tax
incentives and mandates for electricity suppliers to use solar power to
meet customer demand. A primary goal of these policy efforts is to drive
down PV costs to a level that does require consideration government
support. However, the report adds, PV installation costs are not uniform
and are impacted by a variety of factors such as system size, type of
installation and installer experience.
Checking Out California PV
"Letting the Sun Shine on Solar Costs," the report from the Lawrence
Berkeley National Laboratory, presents the results of a statistical
evaluation of cost trends in California’s market for residential and
commercial grid-connected PV. It is based on an analysis of 18,942 PV
systems, totaling 254 MW, that as of mid-2005 had either been completed,
approved or wait-listed (i.e., approved but awaiting additional program
funding) under California’s two largest solar rebate programs, which are
operated by the California Energy Commission and California Public
Utilities Commission.
By exploring cost trends over time and by evaluating the factors that
affect the installed cost of PV systems, the study provides insights
into California’s PV market. The results of this evaluation could impact
policy since it addresses the interaction between incentive levels and
installed costs, and the relative cost of different solar applications,
the report adds.
"California represents the third largest market for PV in the world, and
is poised for significant growth," explained Ryan Wiser, the primary
author of the study. "California is also unique in that solar installed
costs are made public, and yet these data had not previously been
rigorously analyzed. We hoped that by conducting this analysis, we might
reveal insights that would be useful in tweaking and improving
California's policy incentives for solar."
California is the leading market for PV in the U.S., according to the
report. Still, California is way behind the world giants in that
market--Japan and Germany.
“According to the International Energy Agency (IEA), Japan added 228 MW
of solar PV capacity in 2004 for a cumulative total of 951 MW,” the
report says. “The size of Germany’s market is in some dispute, with the
IEA reporting that the country added 305 MW in 2004, for a cumulative
667 MW, while Photon International reports 647 MW of additions in 2004
for a cumulative total of 1,146 MW.”
Declining capital rebates and high fixed power purchase tariffs have
been used in both countries to propel PV market expansion. In aggregate,
these two markets accounted for 60 percent to 80 percent of worldwide PV
demand in 2004, the report adds.
“The California Energy Commission reports that California alone added
more than 36 MW of grid-connected PV in 2004,” the overview continues.
“Through mid-November 2005, 130 MW of grid-connected PV capacity was
installed in California. The report continues: “In 2004, California’s
grid-connected PV additions represented approximately 85 percent of all
grid-connected additions in the United States.”
Incentives for Growth
According to the report, California’s PV market is driven by a mixture
of state and local incentives. Most prominent among these incentives are
capital cost rebates ((denominated in $ per watt) offered to PV system
installers or owners to “buy down” the installed cost of solar
installations. The two most significant current rebate programs are
overseen by the California Energy Commission (CEC) and the California
Public Utilities Commission (CPUC). In addition, significant rebates are
offered by the state’s publicly owned utilities such as the Los Angeles
Department of Water and Power (LADWP) and (SMUD).
California Energy Commission: The California Energy
Commission has a PV rebate program named the “Emerging Renewables
Program.” That program began in March 1998 and is funded mainly by
ratepayers of the state’s investor-owned electric utilities (IOUs). From
its beginning to February 2003, the CEC gave rebates to both small and
large PV systems installed by customers taking electric service from one
of California’s IOUs. Since March 2003, the program has shifted its
focus to primarily residential and small commercial systems under 30 kW.
As of May 2005, the CEC had paid out approximately $196 million of
incentive funds to nearly 13,000 completed PV systems totaling 51 MW of
capacity, according to the report. An additional $80 million was
encumbered to approximately 5,000 (25 MW) approved but not yet completed
PV systems. Historically, approximately 70 percent of all these CEC
applications have resulted in completed systems, the report adds.
California Public Utilities Commission: The California
Public Utilities Commission’s Self-Generation Incentive Program (SGIP)
commenced accepting applications in July 2001. The program gives rebates
for customer-sited PV systems of at least 30 kW in size and installed by
customers taking electric or gas service from one of the state’s
investor-owned electric utilities (IOUs). The PV systems can exceed 1 MW
in size, however the rebate only applies to the first 1 MW. SGIP funds
are collected from electric and gas ratepayers. As of June 2005, the
program had paid out $142 million in incentive funds to 327 completed PV
systems totaling nearly 36 MW of capacity, the report says. Another $300
million was obligated to 465 approved but not yet completed PV systems
(totaling 74 MW). Also, an additional 265 systems, totaling more than
$250 million of rebate funds, were approved but were waitlisted due to
insufficient program funding at current incentive levels. There is an
average drop-out rate of approximately 45 percent for SGIP applications.
Check out next week’s issue of Sun-Enews for Part II of
this overview of the Lawrence Berkeley Laboratory report.
"Letting the Sun Shine on Solar Costs: An
Empirical Investigation of Photovoltaic Cost Trends in California" was
authored by Ryan Wiser and Mark Bolinger of the Ernest Orlando Lawrence
Berkeley National Laboratory, Peter Cappers of Neenan Associates, and
Robert Margolis of the National Renewable Energy Laboratory. The report
was funded by and prepared for the Assistant Secretary of Energy
Efficiency and Renewable Energy (Office of Planning, Budget & Analysis),
and by the Office of Electricity Delivery and Energy Reliability
(Electrical Markets Technical Assistance Program) of the U.S. Department
of Energy.
Published 03/10/2006 |
©
2005 Greenmedia Publishing Ltd.