1. September 16, 2015
Next Wave of Utility Solar Procurement
The shift away from RPS
Colin Smith
Solar Analyst
Smith@gtmresearch.com
2. www.gtmresearch.com -2-
About Greentech Media
NEWS/ONLINE RESEARCH EVENT
Greentech Media delivers business-to- business
news, analysis and events at the forefront of the
global energy transformation. Our coverage area
extends across the clean energy industry with a
focus on solar power and the electric utility
market’s evolution. Greentech Media’s industry-
leading coverage is provided by a team of analysts
from our market intelligence arm, GTM Research,
as well as our world-class journalists and global
network of expert contributors.
GTM Research is the market analysis and
consulting arm of Greentech Media. GTM
Research is comprised of analysts covering solar,
grid edge, and energy storage markets. Our
analysts combine diverse backgrounds in energy,
environmental, emerging technology, information
technology and strategic consulting sectors. This
diverse team provides critical and timely market
analysis in the form of research reports,
consulting, and data subscription services.
Greentech Media and GTM Research experts come
together to produce all of Greentech Media’s industry
conferences throughout the year. These summits
provide a platform for our latest market intelligence
and draw together the industry influencers from
organizations across the value chain.
3. www.gtmresearch.com
2015 & 2016: the final sprint
-3-
1
Key Topics Covered
Next Wave of Utility PV Procurement2
PPA pricing landscape3
Market Outlook 2017 & Beyond4
6. www.gtmresearch.com -6-
States with Installed non-RPS utility PV
MT
WY
ID
WA
OR
NV
UT
CA
AZ
ND
SD
NE
CO
NM
TX
OK
KS
AR
LA
MO
IA
MN
WI
IL IN
KY
TN
MS AL GA
FL
SC
NC
VA
WV
OH
MI
NY
PA
MD
DE
NJ
CT RI
MA
ME
VT
NH
7. www.gtmresearch.com -7-
States with Contracted non-RPS utility PV pipeline >100MWdc
MT
WY
ID
WA
OR
NV
UT
CA
AZ
ND
SD
NE
CO
NM
TX
OK
KS
AR
LA
MO
IA
MN
WI
IL IN
KY
TN
MS AL GA
FL
SC
NC
VA
WV
OH
MI
NY
PA
MD
DE
NJ
CT
RI
MA
ME
VT
NH
8. www.gtmresearch.com -8-
PPA Prices by Contract Execution Date
$0
$25
$50
$75
$100
$125
$150
$175
$200
2008 2009 2010 2011 2012 2013 2014 2015
PPAPrice($/MWh)
Contract Execution Date
Utility PV PPA Prices by Contract Execution Date
10. www.gtmresearch.com
Geographically Diversified: Utility PV in a more diverse set of
markets
-10-
1
The Next Wave of Utility Solar Procurement
Competitive with natural gas and wholesale electricity2
Large portion will be driven by non PRS demand3
2017 cautious optimism4
11. www.gtmresearch.com
Interested in the content from this presentation?
Please contact Inquiry@gtmreserach.com
Interested in learning more about the US utility solar
market?
Check Out: GTM Research’s Utility PV Market Tracker
Please contact freedman@gtmresearch.com
Interested in learning more about the entire US Solar
market?
Check Out: GTM Research/SEIA’s U.S. Solar Market
Insight, Q3 2015
-11-
Thank You!
Notas do Editor
In the remainder of 2015 through 2016, we are going to see 18 GW come online in 18 Months, again the bulk of that will be from utility PV
The utility PV market continues to serve as the bedrock for installation growth in the U.S. solar markets
52% of capacity installed in Q2 2015 across all three market segments and we expect 60% of installed capacity in 2015
Looking ahead to the rest of 2015, we expect utility procurement efforts to slow, as developers double down on efforts to complete ambitious project pipelines before the end of 2016.
RPS is still the primary driver and we will see many of the largest systems on record reaching commercial operation date.
the utility PV market’s installation volumes is increasingly characterized by centralized PV procurement for reasons other than meeting an RPS obligation.
Currently 7.9 GWdc of the utility PV pipeline is procured outside of PRS obligations. This is roughtly 47% of the pipeline and also in indicative of the volume of utility PV that is competitive with wholesale electricity prices
Utility RFP: More and more utilities are releasing RFPs independent of state RPS obligations.
PURPA rules: A number of developers have amassed impressive project pipelines by leveraging the Public Utilities Regulatory Policies Act (PURPA) to lock in fixed-price PPAs that are based on utilities’ avoided costs of peaking generation.
- This differs from state to state as each one calculated avoided cost differently
- Many of these deals are negotiated bilaterally as well between developers and the utilities to reduce costs and obstacles further
Corporate procurement: As mentioned, corporate entities and other large energy users are signing last-ditch PPAs with developers that can bring projects on-line before the end of 2016.
- We see many organizations accessing power through direct access or contract for differences
UOG – more and more we seeing instances where utility are
Wholesale
Currently there have been about 200 MW dc of non RPS installed in the US.
Between 2010 and 1H 2015, steep cost reductions have expanded the universe of state markets where solar is unchained by state incentive funding or RPS driven procurement
Currently there is a pipeline of 7.9 GW of non RPS utility PV
Emerging markets in Texas and the Southeast: As utilities in Texas and the Southeast retire or plan to retire coal fleets ahead of schedule due to EPA coal ash and mercury standards, utility PV is being procured in tandem with combined-cycle natural gas plants to fill in the void.
- Alabama power just approved 500 MW of power
- South Mississippi Electric power 250 MW solicitation
- Arkansas power
Underlying all three of these emerging drivers of demand is the fact that utility PV is proving to be an economically competitive resource to meet utilities’ peak power needs.
As it currently stands, more than 7 GWdc of centralized PV capacity has been procured by utilities based on solar’s competitiveness with natural-gas alternatives.
PPA prices continue to fall driven by cost reductions
By 2019: Utility PV PPA prices are expected to return to late 2015/early 2016 levels
CCAs, munis, co-ops, and corporates interested in offsite centralized PV are expected to play a larger role in procurement, focused on hedging against natural gas price uncertainty
My colleague Cory Honeyman described the outlook at SPI last year as “bleak”
Since then we have seen promising signs that the post 2017 outlook has turned to being more optimistic
While utility PV project economics remain the most sensitive to the loss of the ITC, conversations with developers have turned from bleak to slightly optimistic about an incremental recovery between 2017 and 2020.
With a growing share of utility PV being procured based on cost competitiveness, rather than RPS driven demand, the market segment is seeing a majority of 2017 installations packed into 2016
With EPC firms’ pipelines at full capacity over the next 16 months, signs point to a portion of the 2016 pipeline spilling over into 2017,
with developers leveraging flexible commercial operation dates or accepting financial penalties to bring a project on-line behind schedule to avoid scrapping the project altogether.
By 2019: Utility PV PPA prices are expected to return to late 2015/early 2016 levels
CCAs, munis, co-ops, and corporates interested in offsite centralized PV are expected to play a larger role in procurement, focused on hedging against natural gas price uncertainty
When does the Clean Power Plan become a material driver of procurement? Given that utility scale PV projects can only be used to meet near term compliance obligations, and sluggish timelines for rolling out state implementation plans, the CPP is expected to fuel deployment in the post 2020 timeframe