Photovoltaic solar power gaining momentum with utilities

Photovoltaic solar power gaining momentum with utilities

August 12, 2010 | Julien Happich

Photovoltaic solar power gaining momentum with utilities Research undertaken by Gartner, Inc. and the Solar Electric Power Association (SEPA) has revealed that utilities are becoming increasingly interested in procuring photovoltaic (PV) solar power generation systems and PV is one of the leading technologies considered for near-term renewable energy by utilities.

The survey also found that utilities view onshore wind and biomass as the other key near-term renewable energy sources. Gartner and SEPA conducted a survey of utilities in Europe and the U.S. to understand their requirements and objectives for integrating PV solar systems into their energy generation portfolios.

A telephone survey of utility firms in the U.S., Germany, Spain, Italy and France was supplemented by an online survey in the U.S. The survey was conducted from mid-December 2009 through mid-February 2010, and it included 134 respondents.

“PV solar systems are a cost-effective means of adding distributed and central generation sources,” said Alfonso Velosa, research director at Gartner. “System costs have decreased by over 30 percent since 2008. This has lowered the cost of electricity from these systems and improved their competitiveness relative to other renewable energy sources. PV systems are attractive to many organizations and individuals as they can be designed relatively easily, in a wide range of sizes and to fit in many different locations.”

Utilities in Germany clearly lead in the use of PV resources, with 75 percent of the German utilities surveyed currently using PV as part of their energy resource portfolio. An additional 15 percent of utilities are considering adding PV to their portfolio within five years. To a large extent, this reflects a decade-long effort by the German government to support renewable energy.

Among U.S. utilities, 44 percent of those surveyed indicated they had PV solar energy resources and another 33 percent consider PV solar power generation for use within five years.

“Clearly, U.S. utilities, and their customers, have been exploring the PV market. To some extent, they may also have been learning from activities in markets such as Germany,” said Mike Taylor, director of research at SEPA. “The large number of U.S. utilities that are using PV systems indicates that they are building up their experience with the technology in anticipation of expansive solar growth and new policy initiatives that could occur.”

The survey found that renewable energy requirements and government requirements are the top two global factors behind the utilities' decisions to integrate PV supply into their energy portfolios. This is due to the higher costs of PV energy relative to retail and wholesale electricity prices, and, more importantly, the prevalence of various procurement and incentive requirements in different countries.

“Overall, the survey indicated that federal policy and state regulatory levels have strong influence over utility procurement decisions and strategies,” Mr. Taylor said. “Although price declines will continue to make PV more competitive with retail and wholesale electricity pricing, it is unlikely that the importance of policy will decline significantly in the near-term.”

“U.S. utilities will continue to have strong influence over compliance options for meeting national or state-level renewable portfolio standard (RPS) obligations, but while EU utilities feel a similar influence from policy, their mechanisms and processes for acquiring PV generation are very different,” Mr. Velosa said. “This points to a hazard for the PV industry. If policy does not adapt to the changing pricing environment and other budgetary pressures, there may be a backlash against PV and other renewable energy sources.”

Visit Gartner at www.gartner.com

The SEPA report is available at www.solarelectricpower.org/resources/reports.aspx

Visit the Solar Electric Power Association (SEPA) at www.solarelectricpower.org