Solar Power International 2015 Pre-Event Showcase - Page 20

— The niche opportunities for merchant solar plants that bid into wholesale markets continued to expand this quarter with two new projects coming online, one in New Jersey and one in Massachusetts.

— The scheduled step-down of the federal investment tax credit (ITC) from 30 percent to 10 percent at the end of 2016 appears to be having two somewhat predictable impacts. It is one of several factors — such as compliance with state-mandated renewable energy targets — driving the pre-2017 new project pipeline. At present, 273 projects are set to break ground in the months ahead to ensure completion before 2017. At the same time, new project announcements — a mere 10 for Q1 — have all but dried up in the short term.

— Finally, for the first time since the third quarter of 2012, California gave up its No. 1 spot in the utility solar market, replaced in this case by Nevada.

While the utility-scale solar market typically peaks during the fourth quarter of any given year, then drops in the first few months of the following year, the transition from 2014 to 2015 produced an unprecedented gap of 1,400 MW. True, last year’s first quarter figures were bolstered by the addition of 502 MW of concentrated solar power, specifically from the Ivanpah and Genesis projects, both in California.

But even excluding those outliers, Q1 2015 posted less than half as much new photovoltaic (PV) generating capacity as the same quarter of the previous year.

One possible explanation for the wide disparity is that developers pushed projects to completion before year's end in order to capture the ITC tax and accelerated depreciation benefits for their 2014 bottom lines. Regardless, with 71 projects totaling about 3,238 MW now under construction — including 184 MW being added to projects already in operation — the slump is expected to be short-lived.

The market should also get increased momentum from the 273 projects set to break ground in the months ahead to ensure completion before 2017. This pipeline includes 219 projects that are expected to construct initial phases and begin generating some power this year, ultimately providing 2,138 MW of new capacity when they are online.

Meanwhile, an additional 139 projects, totaling about 5,138 MW, are in advanced stages of development, with completion dates reaching out as far as 2020. As these numbers might suggest, some of these projects are potential megascale facilities of well over 100 MW, such as the 485-MW Blythe project and 280-MW California Flats project.

Diverse drivers signal market maturity

The fact that the utility solar sector can weather a significant seasonal fluctuation reflects its growing diversity and maturity.

Undoubtedly, the most noteworthy development emerging from the Q1 data is the spate of utility-owned power plants. Six of the 13 completed projects are owned outright by either Public Service Company of New Mexico (PNM) or Southern California Edison (SCE). Utility-owned projects have been rare in previous quarters; only six were added in all of 2014.


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