U.S. Utilities to Double Solar Investment Annually

U.S. utilities may double investments in solar power generation each year through 2015 as states demand more renewable energy and equipment prices fall, consultant GTM Research said.

Installations of so-called utility-scale solar projects will reach about 3,000 megawatts annually, worth $8 billion, in five years from 58 megawatts in 2009, GTM analyst Shayle Kahn forecast in a report. Investments may be as much as 5,000 megawatts, worth $13 billion, should grants be extended or the financial system recovers more quickly than expected, Kahn said.

Growth in the U.S. may help panel manufacturers offset the drop that analysts expect in Europe as governments in Germany, Spain, France and the Czech Republic reduce solar subsidies. The European Union accounted for most of the global demand for photovoltaic panels this year as installations in Germany surged, according to Bloomberg New Energy Finance.

“It is difficult not to be bullish about the U.S. utility PV market,” Kahn wrote in the report. “The market potential is enormous, the economics have never made more sense, and the first large projects have been coming on line with increasing frequency.”

Solar-module prices this year are 50 percent lower than in 2008, making utility-size plants economically viable for the first time, according to the report published by GTM, the market research unit of Boston-based Greentech Media.

Iberdrola to SunPower

European operators such as Spain’s Iberdrola SA and Phoenix Solar AG of Germany have started developing industrial-size solar plants in the U.S. to challenge U.S. panel makers First Solar Inc. and SunPower Corp. that dominate the market, Kahn said. Tempe, Arizona-based First Solar, the biggest developer, has 2,347 megawatts of new capacity contracted, almost half of all deals set for construction.

By the end of the forecast period, solar power will begin to be competitive against fossil fuels in some states, preparing the ground for further expansion, Kahn added. California will be the biggest market with more than half of all new capacity, followed by Arizona and New Jersey.

NRG Energy Inc., a power plant operator with almost 26,000 megawatts of capacity, today said its solar unit plans to invest $450 million and would “assume all ownership and financing responsibilities” for a 250-megawatt solar park that SunPower plans to build in San Luis Obispo, California, starting next year.

SunPower last month won California regulatory approval to sell output from the two High Plains Ranch projects to PG&E Corp.’s Pacific Gas & Electric Co. utility for 25 years.

SunPower, based in San Jose, California, fell 11 cents, or 0.9 percent, to $11.84 as of 11:05 a.m. in Nasdaq Stock Market composite trading. Princeton, New Jersey-based NRG slipped 5 cents to $19.50.

To contact the reporters on this story: Ben Sills in Madrid at bsills@bloomberg.net Christopher Martin in New York at cmartin11@bloomberg.net.

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net.

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