NEW YORK--(BUSINESS WIRE)--Rapidly declining equipment costs combined with stronger government support have set the stage for explosive growth in the US solar market over the next decade, according to Bloomberg New Energy Finance, the world’s leading provider of research and analysis into clean energy and the carbon markets. Solar-powered generating capacity – using photovoltaic and solar thermal electricity technologies – could reach 4.3% of the nation’s power capacity by 2020, depending on the industry’s ability to attract an estimated $100bn of investment.
The US today has just 1.4 gigawatts of installed solar power capacity, ranking it fifth globally. But that could rise to 44 gigawatts by 2020, according to Bloomberg New Energy Finance. In a new report, forecast capacity from large-scale solar thermal projects is projected to rise from 0.4 gigawatts currently to 14 gigawatts by 2020. For photovoltaics, the group anticipates a 34% annual growth rate to 30 gigawatts by 2020.
Bloomberg New Energy Finance research shows that the cost of a typical photovoltaic module has dropped by more than half over the past two years. However, solar power is still expensive compared to other power sources. The group’s latest analysis places the unsubsidized cost of best-in-class photovoltaic and solar thermal electricity generation at just below $200/megawatt-hour -- nearly four times the equivalent cost for a coal-fired power plant ($56/megawatt-hour) -- and between two and four times the cost of onshore wind power.
Policy measures such as tax credits, capital expenditure grants, generation incentives and renewable electricity credits will remain a key driver of solar uptake in the US for at least the next three years. The current drop in solar costs is taking place just as such policies are being implemented by the Federal and various State governments, which is expected to lead to rapid growth in commercial, utility and residential solar power.
Bloomberg New Energy Finance expects the commercial sector to lead the way with around half of all photovoltaic installations between now and 2020. After taking into account incentives currently available, Bloomberg New Energy Finance estimates that commercial-scale photovoltaic systems can obtain unlevered returns of 8-14% in states such as Hawaii, Texas, New Jersey, and Massachusetts. More sophisticated financial structures using leverage, combined with further drops in the cost of technology and in the scale of projects, will make commercial-scale solar photovoltaics even more attractive to investors. By 2020 over 3% of commercial rooftops are projected to have such systems installed if current incentives are maintained.
Utility and residential systems will each contribute one-quarter of future installations. Photovoltaic systems can compete better on a retail level than on a wholesale level as retail electricity prices are significantly higher and solar photovoltaic modules can be installed at the user’s location, rather than centrally. Bloomberg New Energy Finance expects residential-scale solar to have been installed on 2.4% of US houses by 2020.
In its analysis of returns available to investors, Bloomberg New Energy Finance found that the amount of sunshine (known as ‘insolation’) alone is a poor indicator of system returns by State: high electricity prices and generous incentives are far more important.
“Policy, rather than sunshine, will remain the US’s greatest solar resource for the next few years," said Milo Sjardin, Bloomberg New Energy Finance’s US head of research. "By the middle of this decade, however, the US retail solar market will be driven by fundamental, unsubsidized competition, which should transform the US into one of the world’s most dynamic solar markets.”
Michael Liebreich, chief executive of Bloomberg New Energy Finance said: “There is a very positive growth story for solar in the US: a few more years of support, and then the engine of unsubsidized competitiveness will take over – and the world will never be the same. The important thing right now is to ensure policy stability, to give investors confidence during this critical period. The US solar industry will require private sector investment of $100bn during the next decade, and any hint that the government’s commitment to clean energy could waver and investors will run for cover.”
The analysis quoted in this release is from a recently published report by Bloomberg New Energy Finance entitled “Quantifying the US solar market: system returns and new build projections”. The full report, which is included in the company’s Solar Insight Service, combines policy analysis and economic modeling to identify investment opportunities across states, and models renewable electricity credit markets and technology adoption rates to forecast the size the future US solar market.
ABOUT BLOOMBERG NEW ENERGY FINANCE
Bloomberg New Energy Finance (BNEF) is the world’s leading independent provider of news, data, research and analysis to decision‐makers in renewable energy, energy smart technologies, carbon markets, carbon capture and storage, and nuclear power. Bloomberg New Energy Finance has staff of more than 180, based in London, Washington D.C., New York, Tokyo, Beijing, New Delhi, Singapore, Hong Kong, Sydney, Cape Town, São Paulo and Zurich.
Bloomberg New Energy Finance serves leading investors, corporates and governments around the world. Its Insight Services provide deep market analysis on wind, solar, bioenergy, geothermal, carbon capture and storage, smart grid, energy efficiency, and nuclear power. The group also offers Insight Services for each of the major emerging carbon markets: European, Global Kyoto, Australia, and the U.S., where it covers the planned regional markets as well as potential federal initiatives and the voluntary carbon market. Bloomberg New Energy Finance’s Industry Intelligence Service provides access to the world’s most reliable and comprehensive database of investors and investments in clean energy and carbon. The News and Briefing Service is the leading global news service focusing on clean energy investment. The group also undertakes applied research on behalf of clients and runs senior‐level networking events.
New Energy Finance Limited was acquired by Bloomberg L.P. in December 2009, and its services and products are now owned and distributed by Bloomberg Finance L.P., except that Bloomberg L.P. and its subsidiaries (BLP) distribute these products in Argentina, Bermuda, China, India, Japan, and Korea. For more information on Bloomberg New Energy Finance: http://www.bnef.com
Bloomberg is the world’s most trusted source of information for businesses and professionals. Bloomberg combines innovative technology with unmatched analytic, data, news, display and distribution capabilities, to deliver critical information via the BLOOMBERG PROFESSIONAL® service and Multimedia platforms. Bloomberg's media services cover the world with more than 2,300 news and Multimedia professionals at 146 bureaus in 72 countries. The BLOOMBERG TELEVISION® 24‐hour network reaches more than 240 million homes. BLOOMBERG RADIO® services broadcast via Sirius XM Radio and 1worldspace™ satellite radio globally and on WBBR 1130AM in New York. BLOOMBERG MARKETS® magazine, Bloomberg Businessweek magazine and the BLOOMBERG.COM® Web site provide news and insight to business leaders and financial professionals. For more information, please visit http://www.bloomberg.com.
The BLOOMBERG PROFESSIONAL service and data products are owned and distributed by Bloomberg Finance L.P. (BFLP) except that Bloomberg L.P. and its subsidiaries (BLP) distribute these products in Argentina, Bermuda, China, India, Japan and Korea. BLOOMBERG, BLOOMBERG NEWS, BLOOMBERG TELEVISION, BLOOMBERG RADIO, BLOOMBERG MARKETS AND BLOOMBERG.COM are trademarks and service marks of Bloomberg Finance L.P., a Delaware limited partnership, or its subsidiaries. All rights reserved.