United States
On the federal level, the US solar market is largely driven by the Investment Tax Credit (ITC), which is equal to 30% of capital expenditures for a solar installation. The tax credit doesn't have a cap and is in place until the end of 2016.
In February 2009, the American Recovery and Reinvestment Act (ARRA) led to the implementation of a 30% cash grant in lieu of the 30% credit for projects that begin construction by the end of 2010. After that, the program reverts to the 30% credit.
The US solar market is further supported by state programs in the form of additional subsidies and renewable portfolio standards. The top 5 US states based on MW installed in 2009 (when 477 MW was installed) were: California (~50%), New Jersey (~13%), Florida (~8%), Colorado (~5%) and Arizona (~5%).
In 2010, we believe Nevada and Arizona will improve their positions in the top five due to several large scale projects completed this year. Our estimates are 900 MW for 2010, and 1,750 MW in 2011.
California
Solar volume growth in California is further supported by the California Solar Initiative, a performance and expected performance-based subsidy program.
The performance-based incentive is for residential and commercial systems ≤ 30 kW. It offers $2.50/watt AC (residential and commercial) and $3.25/watt AC (government entities and non-profits) up-front payments on expected performance based on equipment rating and specific installation factors. The performance-based incentive is for commercial systems > 30 kW. It offers $0.39/kWh for the first 5 years for taxable entities and $0.50/kWh for government entities and non-profits.
New Jersey
Solar volume growth in New Jersey is further supported by a growing Solar Renewable Energy Certificate (SREC) market. One SREC is equivalent to 1 MWh, and can be sold to utilities to meet state renewable portfolio standards (RPS).
As such, SRECs act as a performance-based incentive that sweetens returns for owners and investors in solar projects. The price of the SREC is determined primarily by market availability and price of the Solar Alternative Compliance Payment (SACP). The average price for SRECs in the New Jersey market has ranged from $300 to $700/MWh in the past two years.
Other European Markets
We believe significant capacity will be installed in Belgium, Greece, and potentially UK, Bulgaria, and Portugal. Our estimates for total demand from these markets combined are 500 MW in 2010 and 1,050 MW in 2011.
Other World Markets
A significant PV FIT program capable of boosting China's local market is still lacking. Presently, local installations are subsidized by the Golden Sun Program and the Solar Roofs Program. However, at the end of 2011, significant new PV module manufacturing capacity is expected to come online, which should exceed demand and pressure prices.
Under this scenario, we believe the Chinese government might intervene and subsidize the local manufacturing industry starting at the end of 2011. Our estimates for PV installations in China are 350 MW in 2010 and 900 MW in 2011.
Several new solar markets are developing around the world, such as India, Thailand, Malaysia, Taiwan, the Middle East, South Africa, and Australia. We believe they will add significant global demand, especially starting in 2011. We also expect South Korea to return to significant solar installations, after a slow 2009. For these countries combined, we estimate total PV installations at 600 MW in 2010, and 1,700 MW in 2011.
++++
Ardour Capital publishes in-depth company research, extensive technology-focused reports and a wide range of financial services for public and private companies in Energy Technology/Alternative Energy & Power/Clean & Renewable Technologies. Ardour Global Indexes is a family of pure-play alternative energy indexes.
