Canada
The Canadian state consists of ten provinces and three territories that are independent with regard to energy policy. Each province can therefore determine the focus of its industrial policy and energy policy. This explains the exceptional importance of the province of Ontario, which not only promotes the installation of PV plants in a targeted manner, but also the establishment of the PV industry.
At the end of 2012, approximately 17,000 PV plants were installed in Canada with a total capacity of 766 MW, of which 759 MW were in Ontario alone. The basis for this success in the province is the “Green Energy and Green Economy Act” (GEA) introduced in February 2009, which among other things determined the feed-in tariffs (FIT) for the most important renewable energy systems. The tariffs are graduated according to plant capacity and, in addition to this, roof-mounted plants receive more money than open-space plants. The tariff determined in 2009 moved between 0.802 CAD/kWh (€0.528/kWh) for small roof-mounted plants and 0.443 CAD/kWh (€0.292/kWh), which was paid for large open-space plants.
Immediately after the GEA came into effect, the installation of PV plants began on a large scale in Ontario. The 97 MW open-space plant in Sarnia (Ontario) completed in September 2010 was at that time the largest in the world. In the years that followed, the share of large plants (centralized systems) in the annually installed capacity was always significantly greater than the share of small plants (distributed systems). This imbalance was most pronounced in 2010, as 146 MW of centralized systems and only 16 MW of distributed systems were installed. Two years later the ratio was slightly more balanced. The market volume reached in 2012 was 268 MW, and the distributed systems had a share of 88 MW in this.
There are feed-in tariffs in many countries, but nowhere is the connection between these tariffs and the obligation for PV plants to feature local content as strong as in Ontario. If new PV plants are constructed, at least 60 percent of the components used must have been produced in the province.
Because this obligation to domestic production is hardly reconcilable with the rules of the World Trade Organization (WTO), the provincial government is under pressure. In 2011, Japan and the EU had already requested that the WTO address the local content requirement in Ontario. It is, therefore, to be expected that the GEA will be changed and the relatively generous FIT regulation will be reviewed. This state of uncertainty is unfavorable for the erection of large PV plants, which generally require a longer planning period.
The provincial government is persisting with local content, as the hoped-for effect is already being seen. In the meantime there are twelve factories in Ontario that produce PV modules. The entire productive capacity of these relatively small factories comes to about 1,000 MW and the load is estimated at 50 percent. No current data has been collected on the number of jobs created by photovoltaics in Ontario. At the end of 2012, 3,900 people were employed in the PV sector.
In December 2013, the provincial government introduced a long-term energy plan in order to raise the annual PV installations to 340 MW. Tenders for PV projects with more than 500 kW of capacity should contribute to this. In 2014 and 2015, the volume of the tenders should reach 140 MW respectively. The feed-in remuneration is to be determined in these tenders. The tariff for plants with less than 500 kW was readjusted at the beginning of 2014 to between 0.288 CAD/kWh and 0.396 CAD/kWh (€0.190/kWh to €0.261/kWh).
The Canadian Solar Industries Association (CanSIA) considers an installed total capacity of between 9 GW and 15 GW by 2025 to be realistic. However, this is only attainable if a compromise can successfully be found in negotiations with the WTO, so that the attractive FIT can be retained in Ontario. Moreover, it is desirable that the other provinces in Canada also follow Ontario’s example and increase support for photovoltaics. A sufficiently high level of sun irradiation is available not only in Ontario.
USA
Photovoltaics continue to advance in the USA. The market is expanding with stable growth rates. In the past year, 4.8 GW were installed. However, every one of the 50 USA states is autonomous with regard to energy policy and the general conditions are therefore very different in each state.
More than half of all federal states have set a Renewable Portfolio Standard (RPS) in order to increase energy production from renewable energies within a defined period to a certain share of energy production. Usually the regional energy providers are obliged to reach this. At the same time, it is left up to them to decide which means they use to fulfill this obligation: Whether they erect and operate the PV plants themselves or commission third parties to do so through Power Purchase Agreements (PPAs).
The simplest and therefore most common instrument is net metering. The energy consumers can offset the self-produced solar energy against their own electricity consumption. Depending on the general energy price level, it is more or less profitable for the home owner to invest in solar modules on the roof of their own house.
Operators of large PV plants prefer Power Purchase Agreements (PPA). They conclude contracts with large energy consumers or regional energy providers, in which a certain remuneration is determined over a term of several years. If possible, a PPA is flanked by an Investment Tax Credit (ITC), which is a tax credit on the investment sum. Numerous examples show that through this, very favorable energy delivery contracts can come into being. A contract between an energy provider and a solar energy producer who committed to delivering solar energy from two PV plants in Texas for only US$0.05/kWh for 25 years recently caused a sensation. This astonishingly low price was made possible by a 30 percent ITC from the Federal Government. It is becoming apparent that a large part of the growth in photovoltaics in the USA is based upon the combination of PPAs and ITCs. The large PV plants are not only becoming more numerous, but also consistently bigger. In the meantime, many individual projects have reached the 500 MW limit.
A further and rather insignificant promotion instrument in the USA is the feed-in tariff (FIT). The very comfortable feed-in remuneration for the energy producer, which caused a sustained boom in Germany, is more atypical for the USA and is only applied in individual cases and for a temporary period of time. The idea of a (more or less) autonomous power supply and free trade is more important. This mentality is expressed in particular through net metering and through the marketing of solar energy within the context of PPAs.
Weighted average PV system prices in the USA reached US$2.59/W in the fourth quarter of 2013.
Source: SEIA
In almost all 50 states, there are, in the meantime, considerable PV installations, but the differences are big. Two states in the Sun Belt of the USA stand out: California, with a total installed PV capacity in the amount of 5.7 GW, along with Arizona with 1.8 GW. On the east coast, New Jersey leads the ranking for PV installations with 1.2 GW.
Arizona
Following the example of the neighboring state of California, Arizona is heavily developing photovoltaics. The RPS is, however, less ambitious and demands only a 15 percent share of renewable energies by 2025. Arizona is trying to reach this goal almost exclusively through photovoltaics. Some large PV plants are required for this, but demand is big enough. Projects with a volume of approximately 13 GW are currently being commissioned. Without the small plants on house roofs, however, it is unlikely this will succeed. It was not easy to find suitable support for this. The dispute over an appropriate net metering regulation, which went on for months, made it clear even in sunny Arizona that there is no ideal solution for the expansion of solar energy provision.
California
The most populated state in the USA is predestined for the intensive use of the solar energy, due to its dry, sunny climate and the expansive open areas. In the past year, California had a share of more than 50 percent of the PV capacity installed altogether in the USA.
Initially it looked as though solar thermal energy production would be more successful than photovoltaic energy production. From 1985 to 1991, several large solar thermal power plants were established in the Mojave Desert in California, as photovoltaics was at that time not as cost-efficient as it is today.
However, because the production of PV plants is becoming ever more cost-efficient (in particular due to the fall in price for PV modules), California has in recent years become a showcase for displacement competition which has, in the meanwhile, been decided. It became apparent that large PV plants produce solar energy under the climatic conditions in South California more efficiently than solar thermal power plants. Because suitable areas are abundantly available, ever larger PV plants are planned, as the costs optimum does not appear to have been reached yet. The two largest photovoltaic power plants currently being erected in California will each have a PV capacity of 550 MW.
Before the first large PV plants were planned in California, small plants with a few kilowatts of capacity predominated. In no other state in the USA are more houses equipped with PV systems. The market has been developing stably for years, as several state measures promote photovoltaics.
California was one of the first states in the USA to prescribe a Renewable Portfolio Standard (RPS) to energy providers. The target was to cover a total of 20 percent of the demand for electricity through renewable energies by 2010 and even 33 percent by 2020.
The target for 2010 was not reached however. Only one energy provider came close to the RPS with 19.4 percent, a second provider achieved 17.7 percent and a third achieved 11.9 percent. Moreover, photovoltaics only had an extremely low share in the renewables portfolio for energy production.
To accelerate the development of photovoltaics, in February 2008 the government had already obliged the energy providers to give their customers a feed-in tariff, the amount of which was to be determined by each energy provider itself. The success of this unusual measure is difficult to assess, but the sustained boom over many years in California for photovoltaics has increased the probability that the desired share of 33 percent for renewable energies will be reached by 2020 – especially as wind power is also being heavily developed in California.
In 2013, 2.7 GW were installed in California, half of all solar capacity ever added there.
Source: SEIA
Like almost all states in the USA, California had already enacted a net metering law years ago so that this simplest form of support for photovoltaics could develop. The conditions are more favorable than in most other states. The Californian net metering is possible without limit and is also generous. This means that if in summer more kilowatt hours are produced than are consumed, these surplus energy quantities can be offset against the winter months (perpetual roll over of kWh credits).
The target set three years ago for expanding photovoltaics to at least 3 GW by 2016 has also almost been reached already. The second target (12 GW by 2020) requires an annual expansion rate of only 1 GW. It can therefore be expected that the Californian state will increase these targets soon.
Hawaii
In spite of the active volcanoes that the archipelago is famous for, the energy supply is not based on geothermal energy, but rather primarily on burning oil that has to be imported at a high price. The electricity costs are about three times as high as in the other states of the USA. Because of this, photovoltaics initially reached grid parity in Hawaii. Due to the high level of sun irradiation, the fast and economic development of photovoltaics is not a problem. In the past year, the capacity installed on the islands almost doubled. Anyone who installs a PV plant can expect a generous investment tax credit. Because of this subsidy in the amount of 35 percent of the investment costs, the amortization time is significantly decreased. However, whether the RPS in the amount of 40 percent can be reached by 2030 also depends on the development of wind power. In order to cover 40 percent of the demand for electricity on the main island of Oahu, it is calculated that 800 MW of wind power and 160 MW of photovoltaics are required.
Massachusetts
By 2020, the power supply for the state of Massachusetts is to be covered up to 15 percent by solar and wind energy – this is what is required by the RPS. After that, the share is to grow by one percentage point per year. Because wind power in Massachusetts is only developing slowly (just 106 MW have been installed to date), photovoltaics plays the leading role. In the past year, the installed PV capacity has doubled and the first stage of the promotion program (400 MW) has already been exhausted.
Photovoltaics is promoted using Solar Renewable Energy Credits (SRECs), with which the producers of solar energy are rewarded. In May, the second stage of the promotion program with a volume of 1,600 MW was started (SREC II). If, however, the PV market continues to grow steadily, it is expected that SREC II will already have been exhausted before 2020. Further measures will be necessary in order to reach the 15 percent target.
Nevada
In this sparsely populated, sun-drenched federal state, large PV plants in open spaces naturally play a significantly bigger role than the small plants on the roofs of houses. In Nevada, a RPS that prescribes at least a 25 percent share of renewable energies by 2025 applies. They are trying to reach this target primarily through the erection of open space plants. There is a lot of space for this in the expansive deserts. The world’s largest PV plant at that time had already been erected in Nevada in 2007. With 14.2 MW capacity, it covered part of the energy requirement for the nearby Nellis Air Force Base. In the meantime, the typical plant size has grown from 75 MW to 100 MW. Yet significantly larger projects are in the planning phase. The fact that the “Moapa Southern Paiute Solar” project with a PV capacity of 250 MW is already being built is also of symbolic importance: Because in return, a nearby coal fueled power plant is to be shut down and its energy transport network will be used by the PV plant.
In Nevada, approximately 290 MW of 421 MW totally installed capacity in 2013 belonged to the utility-scale sector.
Source: SEIA
New Jersey
According New Jersey’s RPS, 20.38 percent of the power supply is to be covered by renewable energies by 2021. Solar energy has a target of its own: 4.1 percent by 2028. For that, about 3 GW are required. Because open spaces are more limited than in the Southwest of the USA, they are trying to reach this target through support for the distributed system. The initial situation is favorable, as the only place with more solar roofs than New Jersey is California.
An advantageous net metering regulation and an investment cost subsidy should make photovoltaics attractive to home owners. The “New Jersey Clean Energy Program” pays a subsidy for small plants (up to 10 kW) in the amount of US$1.75/W. Anyone who wants to invest in larger plants (up to 50 kW) can expect US$1/W.
North Carolina
In the ranking table for PV capacity installed in 2013, North Carolina comes in third place. The climber of the year did not set overly ambitious targets (the RPS demanded only 12.5 percent for renewable energies by 2021) and mainly profits from the purchasing power of homeowners and the relatively dense network of PV installers. The PV boom which is still in its early stages in this state is essentially based on the distributed system. Large plants contribute relatively little to growth, but a positive image effect has unfolded however (for example the two large PV plants that deliver energy to the Apple Data Center in North Carolina).
With a newly installed capacity of 335 MW in 2013, North Carolina grew 171% compared to the year before.
Source: SEIA
Central America and South America
The energy policy measures with which the Central America and South America countries promote photovoltaics are very different and can barely be compared to each other. Easy access to fossil fuel deposits often plays a decisive role. For countries with rich oil and natural gas deposits, support for renewable energies does not appear to be urgent. Furthermore, the rank order of renewable energies is unclear. In some regions of South America, photovoltaics are overshadowed by the ample availability of hydro power. Yet generally speaking photovoltaics are becoming important, as it is being recognized everywhere that not only are they simple to install but that this technology has, in the meantime, also become cost-efficient. In hybrid systems, which combine PV plants with diesel-fueled power generators, photovoltaics can also be used economically as a “fuel saver”.
Argentina
The promotion of natural gas from domestic sources would theoretically be sufficient to meet the entire demand for electricity using gas power plants in Argentina. Hydro power is also abundantly available. Under these conditions, solar energy and wind power can only develop slowly. In order to meet the growing demand for electricity, the government is primarily planning new gas power plants and hydro power plants, and has also not ruled out the option of building nuclear power plants.
The region of Patagonia in the south of the country has tremendous wind power potential, whereby a fraction of the area would suffice to provide energy to the whole of South America. In North Argentina, the conditions are ideal for photovoltaics, as solar irradiation measuring significantly more than 2000 kWh/m2 has been recorded. Nevertheless, no more than 218 MW of wind power and 8 MW of photovoltaics were installed in Argentina by the end of 2013.
The government only supports renewable energies indirectly (apart from the large hydro power plants): The national energy company Enarsa officially launched the “Genren” program some years ago, which serves to purchase energy from renewable energy sources. Wind parks, PV plants, small hydro power plants, and biomass power plants benefit from this.
Previously, Enarsa accepted bids for 32 projects with a total capacity of 895 MW. However, the lion’s share of this (754 MW) went to wind power. The projects are taking a long time to be implemented and to date only 130 MW have been realized within the context of the Genren program.
The decision in November 2013 to erect a photovoltaics production center in the province of San Juan provided a ray of hope. The plan is for integrated production (from the silicon ingot to the module) with an annual output of 70 MW. The client is the national energy provider for the province, which will use the modules manufactured by the factory from 2015, among other things to supply power to the gold mines and copper mines as well as the irrigation systems in San Juan. Based on the high level of sun irradiation in the region (approximately 2,300 kWh/m2 annually), photovoltaics can prove its efficiency and become an example for other provinces in the country.
Brazil
In no other country in America is as much energy produced from hydro power as in Brazil. That is good for the CO2 balance, but bad for the energy supply. If there is no rain, energy can become scarce. Because of this, the government is now also promoting other renewable energies, giving priority to wind energy. Photovoltaics first came to the attention of the public in April 2012 when the net metering regulation was decided.
At the end of 2013, licenses for solar projects were sold by auction for the first time. This primarily concerned six projects in the state of Pernambuco with a total capacity of approximately 125 MW (about four times the PV capacity previously installed in Brazil). The bids were accepted on the basis of strong competition for remuneration of only R$0.228/kWh (€0.075/kWh). It will be a challenge even in the sunny state of Pernambuco to produce the solar energy at this low price. This has been the case for quite a while for energy produced by wind power projects in Brazil.
Brazil aims to hold its first federal energy auction exclusively for PV in late 2014.
From the government’s perspective, the auctions for wind projects and solar projects lead to very low energy generation costs and it is therefore to be expected that this first PV auction round will be followed by more. Investors must therefore prepare for strong competition and price pressure.
This does not apply for net metering, because due to the fast-growing demand for electricity and increasing household electricity prices, photovoltaics make a considerable contribution toward reducing the energy bill. This regulation applies to PV plants with a maximum capacity of up to 1 MW and can, therefore, not only be used by private households, but also by commercial enterprises and small factories.
Because almost all components of a PV plant must be imported, the government offers low interest loans to increase the local content share in the net value added. These loans are granted if 60 percent of the production is manufactured domestically, and they apply for the erection of module factories, the installation of large PV plants and for companies that produce PV products in Brazil intended for export.
Chile
Domestic hydro power and imported fossil fuels ensure approximately 95 percent of the Chilean power supply. Because the demand for electricity has been climbing steadily since 1999 by about five to six percent per year and the price-effective natural gas supplies from Argentina are unreliable, energy production is becoming increasingly expensive. The government therefore wants to promote energy production using wind power and solar energy, but has only been able to implement few effective measures to date. These include the legal obligation of the energy providers to cover at least ten percent of their energy production by 2024 using renewable energies. Net metering is also possible if the PV plant does not produce more than 100 kW.
At the end of July 2013, only 3.5 MW of photovoltaics were installed. In September 2013, the government doubled the target for 2020 and increased the share of renewable energies in the power supply from 10 to 20 percent. At this time, PV projects with a total of 4 GW were in the approval phase.
With over 5 GW approved by the government, Chile has the largest project pipeline in the region.
Source: Intersolar
Quite a few projects are planned in the north because the level of solar irradiation is the highest there. In the Atacama Desert, an annual solar energy yield of 1,800 kWh/m2 can be expected. While the region is sparsely populated, there are numerous mines with high energy requirements. The mining companies have already invited tenders for the first PV plants in order to secure their power supply on a broader basis in the coming years with the aid of international EPC constructors.
Ecuador
In recent years, the economy of Ecuador has profited primarily from the rise in oil prices. More than half of the revenue from exports comes from the sale of this important raw material. Because it makes more sense to export the oil at a high price than to consume it cheaply within the country, renewable energies are to cover an ever-increasing share of the demand for electricity.
The basis for national support is the feed-in law introduced in April 2011, which is very similar to the German example and sets a relatively high remuneration over a guaranteed period of 15 years. Energy from PV plants is (regardless of capacity) remunerated at a rate of US$0.4004/kWh. On the Galapagos Islands, which are subject to strict environmental protection regulations and are therefore predestined for photovoltaic energy production, the remuneration is even higher (US$0.4403/kWh).
The first two large PV plants have a total capacity of 58 MW and are to be erected in the province of Esmeralda. The development of the solar market is restricted by relatively low energy prices and a general lack of interest in the country in making long-term investments.
El Salvador
Several of the volcanoes in the smallest country in Central America are active. Geothermal energy has already been used for a long time and currently covers 25 percent of the demand for electricity. Hydro power contributes 40 percent of the energy supply. Based on the high share of both renewable power sources, the expansion of photovoltaics only began tentatively.
Previously, the German Energy Agency had already realized a “flagship project” in 2005 within the context of the “Solar Roof Program”, but the 20 kW project installed on top of a school did not have enough appeal. Because of this, the next larger PV plant is only expected to be erected this year. It will have a capacity of 14 MW and is being realized with financial support from the German national Credit Institute for Reconstruction (KfW) on a site which belongs to the national energy provider CEL. Private investment in photovoltaics does not exist to any great extent in El Salvador.
Mexico
There are many challenges awaiting investors that want to become active in Mexico. After decades under the rule of one party, a rampant bureaucracy and complicated legal system and tax system have emerged. The energy market is almost completely regulated with the result that household electricity prices are about as low as industrial energy prices.
Electricity consumption per capita is growing relatively slowly and is significantly lower than in Argentina, Brazil or Chile. Because of the productive oil fields and natural gas fields in the Gulf Coast region, fossil fuel energies are available in abundance. Energy savings and rational energy use were not priorities for energy policy until recently, and neither were the use of wind power or solar energy.
But that seems to be changing gradually. The government has defined two goals: The CO2 emissions are to be reduced by around 30 percent by 2020 and the share of renewable energies is supposed to increase to 35 percent by 2024. This target is not too high, as larger hydro power plants already provide approximately 20 percent of the country’s power supply.
By the end of 2013, Mexico had 219 MW of utility-scale projects under construction.
Source: Intersolar
The climate conditions are favorable both for wind power and for photovoltaics, which could benefit from the high level of sun irradiation (1,700 to 2,200 kWh/m2 annually). Because of the high wind speeds in the federal state of Oaxaca, numerous wind parks have been built there. As “Independent Power Producers” (IPP), these exploit a gap in the heavily regulated energy market and, within the context of an invitation to tender, have been given permission to generate energy. This model also essentially comes into question for large solar parks. However, the energy prices determined by auction are extremely low.
Photovoltaics is in its very early stages. At the end of 2012, approximately 20 MW were installed in Mexico. Projects with a total capacity of 130 MW have been approved since then and are gradually being constructed. The largest project to date, Aura Solar I with 39 MW, was inaugurated at the end of March 2014.
It may be worth installing a PV plant for private households too, which consume more than 250 kWh per month and therefore pay a tariff that is four times greater than the average household. The same applies to small commercial enterprises. They may produce solar energy to meet their own needs and feed excesses into the public network. However, this special net metering market still needs to develop.
Uruguay
Because hydro power is already extensively developed, the government is relying on wind power and photovoltaics to reduce its dependence on oil imports. In May 2013, the government gave the national energy provider UTE permission to conclude long-term delivery contracts for solar energy. The term of these Power Purchase Agreements was set to a maximum of 25 years and the volume was initially set at 200 MW.
During several rounds of invitations to tender, the delivery contracts were assigned in three performance-based categories: small PV plants (until 1 MW), medium-sized plants (1 to 5 MW), and large plants (30 to 50 MW).
In November 2013, eleven bidders were involved in the first round of bidding. The offers for medium-sized PV plants were between US$93 and US$160/MWh (between €67 and €116/MWh). Photovoltaics is still in the very early stages in Uruguay, but the price level is already relatively low.
