Solar and storage USA: Flux, confusion and opportunity
With its sheer size, population and wealth, it doesn’t take much for the United States of America to become a world leading market in a particular economic segment. This is true of the solar PV and storage sectors, where the country has risen to be the second largest PV and the leading commercial and industrial battery storage market relatively quickly.
However, there remains a great deal of uncertainty in both sectors in 2017 – and it is leading to some unusual and largely unexpected developments. This was very much display at the annual Solar Power International (SPI) trade show and conference, hosted at the Mandalay Bay convention center. DWR eco attended the event, in support of e-mobility and large scale storage powerhouse and solar module producer BYD, and residential battery storage innovator and trend setter sonnen.
Buoyed by tax incentives and the technology’s falling cost, solar PV in the U.S. has grown at breakneck speed in recent years – the market volume doubling in 2016. At SPI 2017 much of the discussion revolved around the imposition of hefty duties on imported modules, an initial ruling on which will be handed down this Friday – September 22.
Known as ‘Section 21’ the trade dispute was launched by one bankrupt U.S. solar module producers, and joined by SolarWorld Americas. It is likely to be the first international trade dispute to be presided over by the Trump Administration – leading to many in the industry feeling decidedly pessimistic about the likelihood the market would be unscathed by tariffs.
Hefty tariffs would undoubtedly put the breaks on U.S. solar industry growth, with domestic producers currently operating only a fraction of the production capacity required to fulfill demand – both from the distributed rooftop and large scale power plant segments. It has also lead to a hoarding of modules from project developers and distributors, which are ensuring their warehouses are full well in advance of the potential imposition of tariffs.
This buying spree, coupled with demand remaining firm in 2H 2017 in China, has resulted in tier one PV module manufacturers being almost completely sold out – a development that would have been seen as implausible only 12 months earlier.
Turning to storage, recent events also dictated proceedings. Hurricane Harvey and Irma was also names on many SPI attendees’ lips, with tens of millions of Florida and Texas residents having been left without power for a period in the wake of the destructive winds and rain. Battery storage, coupled with PV, is an increasingly attractive proposition for many households facing such severe weather events and an electricity grid infrastructure that often falls short of being sufficiently robust.
And the use case of battery storage to provide backup power is an important one. In the U.S., average retail residential electricity prices remain low – a national average in the 12 – 15 U.S. cent/kWh range. While in some states, such as Hawaii, that is not the case, overall the U.S. is a nation of cheap electricity from the socket.
Given this, at present costs the payback of a residential battery storage system in the U.S. pushes out beyond the 10-year lifespan of the batteries themselves. This is very different to the situation in leading storage markets such as Germany and Australia, where high power prices make solar+storage an economically competitive prospect. Given these economics, the backup power market for storage providers is a crucial one – alongside the early adopters.
On the commercial and industry (C&I) front, battery storage is highly competitive in the U.S., at least in some states. In some areas C&I customers face hefty peak demand charges from their utility, sometimes making up some 50% of the total annual bill. Battery systems can shave these demand peaks, and as a result a plethora of larger storage units were on display at SPI – and are being installed.
In fact, on the roof above the SPI 2017 attendees sits one of the world’s largest rooftop solar PV systems. In mid 2017, NRG Energy installed an 8.3 MW rooftop system onto the Mandalay Bay resort. Part of the array is visible from the convention center windows and giant banners ensure that hotel guests are well aware of the sprawling facility’s green credentials.
The next 6 – 12 months for solar PV and storage providers to the U.S. market is bound to be a wild ride. Ample opportunity exists, but as does a fast moving regulatory and demand landscape. One industry veteran described the situation as presenting “very interesting market dynamics” while in another breath “mayhem and confusion.” Both descriptors work, and what’s certain is that it’s not going to be dull.