The industry has struggled to craft a feed-in-tariff (FiT) structure that works for solar generators and utility customers, with mixed success. But now, the California Public Utility Commission...
Solar Hype and Hope
Utility-scale projects suffer growing pains.
Solar scale-up seems to be happening even faster. Although there are still plenty of small projects—in the kilowatts and single-digit megawatts—many recent contracts involve massive systems in the 200-MW, 500-MW and even the gigawatt range.
Of course, few if any of these large projects would exist today without federal tax subsidies and state-level renewable portfolio standards (RPS)—especially those with solar carve-outs. And solar power still suffers many of the same limitations that plague wind power. Namely, it’s variable and non-dispatchable; its capacity factor never will rival the typical fossil, nuclear or large hydro plant; and on a per-kilowatt basis, it remains more expensive than the least-cost fossil alternatives—or wind power in most cases.
Nevertheless, the dramatic scale-up in project size is bringing solar into the mainstream as a utility-scale generation resource—and as an investment opportunity (see “ Chasing the $un ”). No longer can solar be dismissed as a novelty or a publicity stunt, à-la the solar panels on Jimmy Carter’s White House. Further, solar brings some advantages that suggest its long-term potential exceeds that of wind power, perhaps by a wide margin.
Solar projects are easier to site because sunlight is geographically ubiquitous and more consistent than wind is. And solar facilities produce power in a way that’s more closely matched to the load curve— i.e., they reach their maximum output just as cooling demand is peaking.
These factors alone are enough to assure opportunities for solar energy. But a third factor might prove to be a game changer: solar still has a lot of room for improvement in efficiency and cost. Wind technology can still improve too, but such improvements likely will be incremental. By comparison, PV’s cost-per-performance ratio has been advancing at an exponential pace—and there’s no reason to expect that pace will slow down much any time soon.
Despite the promise, contracts for large projects haven’t yet translated into much steel in the ground. The fact is, of the many announced projects exceeding 100 MW in size, exactly zero have entered service. The country’s largest operating PV plant, Sempra’s Copper Mountain facility, has a maximum capacity of less than 50 MW, and the biggest solar thermal plants, the 80-MW SEGS VIII and IX plants, were built 20 years ago.
That’s not to say some of the mega-solar projects now in development won’t get built. Abengoa Solar, for example, secured $1.45 billion in financing to build what it says will be the world’s largest parabolic trough CSP plant, the 250-MW Solana project near Phoenix. Abengoa has a 30-year PPA with Arizona Public Service, and a loan guarantee from the Department of Energy. Projects like that, fully financed and now in construction, seem likely to reach the finish line.
But a string of major project cancellations raises real questions about how many of the current crop will survive.
• Developer Solar Millennium in late January 2011 canceled its plans to build a 250-MW parabolic-trough plant near