transforming economics on solar - energy exchange · 2017-08-29 · 2016. annual pv installations...

Tampa Convention Center • Tampa, Florida

Transforming Economics on Solar



Customer View of Solar PV Costs:Past, Present, and Future


Amy SolanaPacific Northwest National Laboratory

August 17, 2017

Energy Exchange: Connect • Collaborate • Conserve3

US Average Price of Ground-Mounted Solar PV

Data Source: BNEF 2017

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2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E

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alle

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f PV

($/W

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Residential

Commercial

Utility-scale Tracking

Utility-scale Fixed


Historical PV Installations

Energy Exchange: Connect • Collaborate • Conserve

• Competition, especially from China– Forced lower profit margins– Increased manufacturing efficiencies– Resulted in technology improvements

• Government/utility programs– SunShot Initiative– Incentives

• Increased demand by making PV affordable• Gradual reduction in incentives forced industry to

reduce costs

5

Why the Decline?


Trend of Solar PV Component Prices

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Inverter

BOS

EPC

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Data Source: BNEF 2017

Silicon shortage -> innovation -> increased production capacity -> oversupply -> low prices

Production improvementsModular assemblyBetter supply chain managementImproved labor efficiency (automation)

String inverters, mini inverters

Module production improvements trickle down to BOSComponent standardization allows factory assembly and higher throughput

Increased module efficiency reduces per-kW fixed costs and area-based costs (installation labor)Improved mounting systems resulted in faster installation


• Revisiting PV – feasible where wasn’t before– Tracking, carport and rooftop mounted systems– Sites with lower electricity rates and/or lower

insolation values– Federal agencies can more easily meet renewable

energy goals and mandates• Siting utility projects on their land• Working toward net zero• Viewing PV as resiliency solution, especially

combined with storage (which is also coming down in cost)

7

Current Customer Reactions


• Most predictions point to YES…– SEIA estimates capacity will triple in next 5 years– BNEF estimates even commercial and residential costs will be less than $1/W by 2030

HOWEVER, many factors may reduce PV installation rates and raise prices• Changes in customer charges

– Shift in peak demand (duck curve)– Net metering reduces customer’s bill, pushing grid maintenance costs onto other customers– Reduction in avoided energy cost, and therefore cost-effectiveness of PV

• Bankruptcy– Reduced competition could lead to higher prices

• Trade war– Suniva filed petition for minimum panel cost of $0.78/W

(≈ 2013 cost)• Tax policy

– Reduction in solar incentives (including net metering)– Income tax cuts (reducing value of tax savings)

• Could be replaced by state incentives– US energy policy changes

• Labor shortage

8

Looking Ahead: Will Prices Continue to Fall?


Amy SolanaPacific Northwest National Laboratory

(503) [email protected]

9

Questions?

mailto:[email protected]


Top 5 state PV capacities• CA: 7,379 MW• NJ: 2,284 MW• MA: 1,941 MW• AZ: 1,647 MW• NY: 575 MW

10

Installed PV Capacity


The SunShot Program


Charlie Gay, Ph.D.Solar Energy Technology Office : U.S. Department of Energy

August 17, 2017


Generation CustomerDelivery

Source: EPRI, 2009

The Grid of the Past


Electricity Mega-Trends

Renewables accounted for >50% of new worldwide electricity-generating capacity in 2016

2010 20202000

Variable frequency drives

CFL

Source: adapted from 9 February 2017 KeynoteNational Association of State Energy OfficialsChandu Visweswariah, IBM


Generation Grid Consumer

Monopoly Regulated

Politics: Siting, NIMBY, Multiple Jurisdictions, Eminent DomainRegulatory: Who builds what? How are they compensated?Business: Who owns what? How to finance?

More Grid-ISOs-Central PV-Wind

Less Grid-DG-Microgrids-Storage

Less Grid-DG-Microgrids-Storage

The Grid is the Fulcrum


Generation ProsumerDelivery

Source: EPRI, 2009

The Grid of the Future


The Digital Energy Revolution (also a “DER”)


Centralized and distributed generation optimized with finely tuned 2-way load balancing.

Modern Electric Grid: Two Way Energy and Data Flow


More progress must be made in order to take advantage of this domestic energy resource and to compete in the growing global market.

Sources: International Energy Agency, "2015 Snapshot of Global Photovoltaic Markets”; “Solar Thermal Electricity Global Outlook 2016”.

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Solar Supplies 1% of U.S. Electricity & Growing


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PV Deployment and System Price in the U.S. (2009 – 2016)

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Sources: National Renewable Energy Laboratory, "U.S. Solar Photovoltaic System Cost Benchmark: Q1 2016"; GTM Research and SEIA, “U.S. Solar Market Insight Report: 2016 Q4."

2016

$/W

att

(projected)

U.S. Solar: Falling Costs, Rising Deployment


• Coal’s contribution to total energy collapsed to 14% in 2016, from 23% in 2007. • Natural gas climbed from 23% to nearly 30%, while renewables (including

hydropower) surged to over 10%, from 6.5%.

U.S. Electricity Demand


Solar currently supplies about 1% of the electricity consumed in the United States.

In the first three quarters of 2016, solar represented one-third of all new electricity capacity installed in the United States.

New Capacity Added Q1-Q3 2016

UTILITIES

19.3 GW

COMPANIES(Non-Residential)

7.2 GW

HOUSEHOLDS

7.6 GW• About 1/3 of all U.S. utilities

in 39 states offer solar power to their customers.

• Over 60,000 U.S. businesses have installed solar to lower their energy costs and help to reduce prices for consumers.

• Electricity customers across all 50 states have chosen solar for their properties.

• Over 1.2M total U.S. homes have installed solar energy systems.

Source: Cumulative solar capacity from GTM Research and SEIA, “U.S. Solar Market Insight: Q4 2016”

Wind12%

Natural Gas45%Nuclear

6%

Solar34%

Other3%

Solar is One of the Fastest Growing Energy Sources in America


Cumulative Solar Change from 2014 to 2016

Source: EIA, Electric Power Monthly (February 2017, February 2015).

• At the end of 2016 there were more than 100 MW-AC of solar in 28 states (15 states in 2014), and more than 15 MW-AC in 39 states and DC (32 states and DC in 2014)

– More than half of solar capacity is still in two states.

>1,500 MWAC>500 MWAC>100 MWAC

>15,000 MWAC

>15 MWAC

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December 201634.7 GW

December 201416.5 GW

Utility PV

57%

CSP5%

Distributed PV

38%Utility PV

52%CSP10%

Distributed PV38%


The amount of power that is produced by a PV system depends upon the solar resource availability (in addition to other factors like temperature and snowfall), which is location dependent. The median solar resource for the United States is represented by Kansas City, MO, while the highest solar resource is represented by Daggett, CA, and the lowest solar resource is represented by Seattle, WA.

Average Solar Resource Calculation


• 5 states produced more than 5% of total net generation from solar in 2016 and an additional five states produced more than 2.5% of total net generation from solar.

• Solar technology contribution varied by state, with Hawaii generating most of its energy from distributed PV, while North Carolina generated the vast majority of its energy from utility-scale PV.– During the same time period, CSP generated more than 1% of California’s electricity

and more than 0.5% in Nevada and Arizona.Source: EIA, “Electric Power Monthly,” forms EIA-023, EIA-826, and EIA-861 (February 2017).Note: EIA monthly data for 2016 is not final. Additionally, smaller utilities report information to EIA on a yearly basis, and therefore, a certain amount of solar data has not yet been reported. “Net Generation” includes DPV generation.

13.2%

7.9% 7.8% 7.3%5.8% 4.9%

3.5% 3.0% 2.9% 2.7%1.4%

0%2%4%6%8%

10%12%14%

Sola

r Gen

erat

ion

as a

Per

cent

age

of To

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et G

ener

atio

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CSPDPVUPV

Solar Generation as a Percentage of Total Generation, 2016


U.S. Installation Breakdown

• At the end of December 2016, there were 33.0 GW-AC of solar systems in the United States.– Of the 33.0 GW, 19.8 GW were utility-scale PV and 13.2 GW were distributed PV.

• As of December 2016, California system capacity represented 42% of all U.S. PV capacity, leading in both the utility-scale and distributed sectors.

• Half of the top 10 states led in both the utility-scale and distributed sectors, while the other states on the list had less diverse deployment.

Source: EIA, “Electric Power Monthly,” forms EIA-023, EIA-826, and EIA-861 (February 2017).Note: EIA monthly data for 2016 is not final. Additionally, smaller utilities report information to EIA on a yearly basis, and therefore, a certain amount of solar data has not yet been reported.

25

5,360 1,260

998 908

733 569

443 287 266 254

2,107

0 1,000 2,000 3,000 4,000 5,000 6,000

CaliforniaNew Jersey

MassachusettsArizona

New YorkMaryland

HawaiiColorado

ConnecticutTexas

Rest of U.S.

Distributed PV Installed Capacity, Top 10 States, as of Dec.2016Megawatts (MWAC)

8,520 2,272

1,611 1,394

981 847

579 545 480 418

2,124

0 2,000 4,000 6,000 8,000 10,000

CaliforniaNorth Carolina

ArizonaNevadaGeorgia

UtahTexas

New JerseyNew Mexico

ColoradoRest of U.S.

Utility-Scale PV Installed Capacity, Top 10 States, as of Dec.2016Megawatts (MWAC)


U.S. Residential PV Penetration

• Since 2005, when the investment tax credit was passed by congress, the residential PV market has grown by approximately 51% per year, or about 95X.

• As the end of 2016 there were over 1.25MM residential PV systems in the U.S.– The millionth U.S. residential PV system was likely installed in Q2 2016.

• Still, only 1.1% of households own or lease a PV system (or about 1.7% of households living in single-family detached structures)

– However, solar penetration varies by location. HI, CA, & AZ have residential systems on an estimated 29%, 9%, and 7% of households living in single-family detached structures.

26

Sources. Res. PV Installations: 2000-2009, IREC 2010 Solar Market Trends Report; 2010-2015, SEIA/GTM Solar Market Insight 2010-16 Year-in-Review. U.S. Households U.S. Census Bureau, 2015 American Housing Survey; state percentages based on 2000 survey.

0

250,000

500,000

750,000

1,000,000

1,250,000

1,500,000

0.0%

0.5%

1.0%

1.5%

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2.5%

3.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Cum

. # o

f Res

. PV

Syst

ems

% o

f hou

seho

lds w

ith P

V

Residential PV systemsU.S. householdsSingle-family detached houses


050

100150200250300350

Cumulative PV Installed (MW)

201420152016

• At the end of 2016, the top 10 cities represented 1.6 GW of cumulative PV capacity, or 4% of total installed U.S. PV capacity– It is estimated that these cities are only using 3%-14% of their technical

potential for rooftop installations.• 17 cities had installed more than 50 watts/person at the end of 2016

– Honolulu had installed approximately 0.5 kW per person.

Source: “Shining Cities Harnessing the Benefits of Solar Energy in America.” Spring 2017.

0100200300400500600

PV Per Capita (Watts/Person)

Leading U.S. Cities


The “Duck” Curve


An energy-efficient building, where on a source energy basis, the actual annual delivered energy is

less than or equal to the on-site renewable exported energy.

Zero Energy Ready Building

Building or Campus or District or Portfolio

Zero Energy Building (ZEB) Definition


‘Smart’ Buildings

ZigBee mesh

Plug Load Controllers

ZigBee mesh

Lighting Load Controllers

HVAC ControllersBEMOSS Core

A building that provides a productive and cost-effective environment through optimization of its four basic components - structure, systems, services and management - and the interrelationships between them." Source: Intelligent Buildings Institute (IBI)


Current NREL Analytics


Cyber Reference Architecture which enclaves DER devices to minimize common-mode vulnerabilities.

Secure, Scalable Control and Communications for Distributed PV


Building Energy Optimization


The Path to Zero Energy

ReferenceBuilding

PV More Efficient

Building Designs

Zero NetEnergy

Annu

alize

d En

ergy

-Rel

ated

Cos

ts ($

/yr)


Building Energy Optimization - Menu


Efficiency + PV Analysis Models

New Construction, Life-cycle Cash flow Analysis


Demand Response – Peak Shifting Potential


SunShot 2030 Goal + Low Cost Storage (3¢/kWh)

SunShot 2030 Goal (3¢/kWh)

SunShot 2020 Goal (6¢/kWh)

Half the Cost, More than Double the Solar


• Cost Reduction – Focus on key component and systems level needs, to enable

national unsubsidized options• Permitting/Siting

– Address competing use challenges to promote co-existence (Environmental, Human Use, and Permitting)

• Financing – Reduce risk to investors through demonstration of next

generation of components and systems at scale• Access to transmission

– Develop innovative solutions that address access to transmission and congestion (i.e. forecasting, …)

• Consumer Awareness– Provide unbiased/fact based information and analysis

Renewable Power – Key Priorities

Energy Exchange: Connect • Collaborate • ConserveTampa Convention Center • Tampa,Florida


Economics of SolarCOL (Ret.) Dave McNeil

Hannah Solar Government ServicesAugust 17, 2017

Agenda

• Solar Industry Update• The Economics of Solar• Cost of Solar• Cost of Energy from the Grid• Available Incentives• Types of Solar Systems• Questions?

43



Highlights:

– Since 2006 the solar market has grown 65% on average each year (95% from 2015 to 2016)

– Solar PV prices have fallen 19% in the past year and 63% over the last 5 years

– Suniva petition and trade case: implications for the future of solar module pricing

Data obtained from the Solar Energy Industries Association

44

Energy Exchange: Connect • Collaborate •Conserve

SOLAR INDUSTRY UPDATE



45



• Suniva Petition:

– May 23, 2017: Int’l Trade Commission said it would consider Suniva’s petition asking for a $0.78/W price floor in solarmodules

– The Commission will decide by Sep whether or not torecommend “remedies to safeguard against foreign-manufactured crystalline silicon photovoltaic products.”

– If yes, recommendation to Pres. Trump in Nov.

46




• Energy (kilowatt hours) generation is the source of savings– A kilowatt hour (kWh) generated by on-site solar is a kilowatt

hour not purchased from the grid

• 3 Main Drivers of the Economics of Solar:– Cost of solar (equipment and installation)

• Recovering the cost of the system through energy generation

– Cost of energy from the grid• Value of savings directly tied to cost of energy from the grid

– Available Incentives• Incentives may increase the value of energy generated by solar

47


THE ECONOMICS OF SOLAR


The cost of solar refers to the initial investment.• Impacts breakeven point, total return on investment,

and internal rate of return (IRR)Key Factors:• Economies of scale• Techonology – type of modules and inverters;

tracking vs. fixed tilt; Microgrids• Location – CONUS vs. OCONUS• Design

48


COST OF SOLAR


COST OF SOLAR

49



Value of energy savings depends on the cost of energy from the grid.• Residential avg price per kWh in Hawaii -

$0.3033/kWh• Residential avg price per kWh in Florida -

$0.1158/kWh

All else constant, solar energy savings are more valuable in HI than in FL.

Data obtained as of April 2017 and is from the Energy Information Administration (www.eia.gov).

50


COST OF ENERGY FROM THEGRID

http://www.eia.gov/


Utility Incentives:Incentives for renewable energy generation are offered by utilities often because they are required by state legislation to incorporate renewable energy onto the grid

Types of Incentives:

• Rebates – up-front cash incentives• Performance-Based incentives – incentives that vary based upon

energy production– Buy-all-sell-all or Feed-in tarrifs (FIT)

• Net Energy Metering – credit on a utility bill for energy produced– Energy is produced has the same effect on the utility bill as energy

saved

10 Energy Exchange: Connect • Collaborate •Conserve

AVAILABLE INCENTIVES


State and Federal Incentives:

The Federal Government and some state governments offer tax related incentives for the investment in renewable energy to promote clean energy and encourage private industry investment in emerging energy markets.

Types of Incentives:

• Tax Credits – 30% Investment Tax Credit (ITC) offered by Federal Government; state tax credits vary by state

• Modified Accelerated Cost Recovery System (MACRS) – schedulefor accelerating the depreciation of solar assets– MACRS indirectly provides state income tax savings in states that calculate

taxable income based on Federal taxable income

• Bonus depreciation – modifies MACRS allowing solar assets to be depreciated by 50% in year one

Government energy buyers increasingly use tax incentives to source renewable energy by leveraging private investement (PPA, ESPC, UESC)


AVAILABLE INCENTIVES


Distributed Generation vs. Utility Grade• Distributed Generation

– Typically 1 MW or less– Interconnected with the local utility or coop– Used for energy cost savings

• Utility Scale– Typically 1 MW to 10 MW or larger– Owned by the utility/coop or a third party through a

PPA– Used to diversify generation mix


TYPES OF SOLAR SYSTEMS


Grid Tied vs. Off Grid• Grid tied, utility interactive.

– 98% of all solar systems today– Primary focus is energy cost reduction– System shuts off with no back up if the utility power is out

• Off grid (no utility connection)– Primarily for remote sites, battery based

• Hybrid (grid tied, utility interactive with battery back up)– Power savings and battery back up for limited time

• Microgrid (may have utility connection)– A group of interconnected loads and generation sources thatcan

operate independently and autonomously




Ballasted Roof Mounted

Star Gospel Mission: Charleston, SC

18 kW

Target: North Charleston, SC 500 kW




Penetrating Roof Mounted: Army Reserve Center, Denton, TX

8 kWStanding Seam Mounted: Hubner Manufacturing, Mount Plesant, SC

918 kW




Ground Mounted

FT Allen, Puerto Rico 937 kW

Tucson International Airport, Tucson, AZ 500 kW




Parking Canopy Mounted

Camp Lejeune, NC 742 kW

Joint Base Pearl Harbor-Hickam, HI 880 kW




Questions?

59

COL (Ret.) Dave McNeil President / CEO [email protected]

(843) 718-1866

www.hsgs.solar

mailto:[email protected]

http://www.hsgs.solar/

transforming economics on solar - energy exchange · 2017-08-29 · 2016. annual pv installations...

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