Technische Universität Berlin
Global Production Engineering
United States of America Solar Market
Solar Market and Business Management
Author:
Jesus Alejandro Martínez Cantú
SS 12
Solar Market and Business Management | Dr. Christine Wörler
USA Solar Market|Jesús Martínez
1
Technische Universität Berlin
Global Production Engineering
Index
Page
1.
Introduction……………...……………………………………………………………………........03
2. Main Assumptions…………..………………………………………………………………………03
3. USA Overview (Key facts)…………………………………………………………………….......04
4. Electricity Energy Sector Infrastructure …………………………...……………………………..04
5. Electricity Prices and Solar radiation……………………………….………………...…………..05
6. Levelized Cost of Electricity…………………………….……………………………………........07
7. Grid Parity Projection…….……………………………..……………………………….…….......08
8. Political Framework…………………...………………..…………………...……………………..10
9. Projection PV utility scale………………………………………………………………………….10
10. Conclusion Solar Market……..……….. ………………..………………………………………...11
11. References………………….……………………………………………………………………….12
Solar Market and Business Management | Dr. Christine Wörler
USA Solar Market|Jesús Martínez
2
Technische Universität Berlin
Global Production Engineering
1. Introduction
United States of America United States of America (USA) is a country that represents
leadership in almost every market worldwide since its condition in last decades as the largest
economy in the world. Its scientific structure may be considered among the strongest ones in
the world and by these means has stayed between the most developed nations contributing for
the research and development in alternative power sources for the humankind.
Nevertheless in terms of primary energy consumption, the USA as result of political decisions
has developed a strong dependency for fossil fuels in past decades. Still today for instance in
energy consumption for electricity generation essentially relies on coal, natural gas and nuclear
in order to supply its dynamic demand. (42%, 25% and 19% respectively from these sources)
This condition has driven a limited growth for renewable energy in a country that from the
potential point of view consulting its land, natural and economical conditions may be
undoubtedly the highest renewable energy producer.
Recently, unfortunate events as the Fukushima Daiichi nuclear disaster in Japan, solar
technology trend to lower and the proximity to reach grid parity in some cities from the USA,
have accelerated and shake out the country vision of renewable energy sources encouraging its
growth having support from federal government and some states along the country particularly
for solar technology. In this vein USA’s solar energy installed capacity ranked in 2010 as 5th in
the world reaching around 2.5 GW, but nowadays having plans to spread significantly its
capacity in further years to around 18.8 GW by year 2025.
In effect the solar market worldwide is swiftly evolving and USA’s vision and intervention to
create the proper conditions to compete in this matter should not only stand aware of the
movement but being able to set the tone worldwide if want to stay on the top for this
undoubtedly evolution for energy generation and management in mankind history.
This document exemplifies an analysis of the current USA’s infrastructure for electrical energy
and the prices on the market in order to compare them with the levelized cost of electricity from
solar systems (residential 5 kW, industrial 200 kW and utility scale 187.5 MW) and thereby
projecting the grid parity occurrence in further years. Additionally as framework of the analysis
some current political initiatives are mentioned to understand the incentives created to
encourage this solar technology trend. This analysis leads to an evaluation and conclusion of
the current US Solar market and opportunities that may be foreseen and discussed.
2. Main Assumptions

Systems prices for residential, industrial and utility scale are taken from a study of the
National Renewable Energy Laboratory (NREL) of the US department of Energy. (DOE)
(http://www.osti.gov/bridge)

Levelized cost of electricity for residential, industrial and utility scale is calculated from the
NREL simple calculator model available in Internet. (http://www.nrel.gov/analysis/tech_lcoe.html)

A capacity factor of 20 % is assumed for all the USA territory as average.
Solar Market and Business Management | Dr. Christine Wörler
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Technische Universität Berlin
Global Production Engineering
3. USA Overview (Key facts)

Federal constitutional republic (50 States and 1 Federal district)

9.8 million km^2 area (25 times Germany) and 312 million people (3rd)

GDP 2011; US$ 15.1 trill. (1st), China US$ 7 trill. (2nd) . (1 US$ ≈ 0.79 Eur)

Energy Consumption 2011; 97.5
(1st ), more than 7 times Germany consumption.
http://www.eia.gov/energy_in_brie
f/renewable_electricity.cfm
http://www.eia.gov/energy_in_brie
f/major_energy_sources_and_users
.cfm
 Total energy consumption increases 12 % by 2035. (0.5% per year)
Fig. 3.1 and 3.2.
4. Electricity Energy Sector Infrastructure
http://www.eia.gov/state/
The electricity generation in the USA is performed by several kinds of power plants differing
from the used source. The next picture shows the wide range of sources that are utilized for
electricity generation in the USA throughout its land.
Fig. 4.1: Different electric power plants in the USA
After the generation the distribution of electricity takes place by means of the used of high
voltage grids. In the case of the USA there is no a national grid for this purpose but there exist
three operating grids interconnected in the 48 contiguous states, while for the case of Alaska
and Hawaii is found the existence of isolated grids respectively. The next picture shows the
distribution of the three operating grids through the 48 contiguous states.
Solar Market and Business Management | Dr. Christine Wörler
USA Solar Market|Jesús Martínez
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http://www.eia.gov/energy_in_brief
/power_grid.cfm
Technische Universität Berlin
Global Production Engineering
Fig. 4.2: Operating grids for electricity distribution in the USA
http://www.eia.gov/todayinenergy/
detail.cfm?id=4270
This combination of different types of power plants and grids to distribute the electrical energy
leads to flow mainly to the high densely populated regions as the next picture depicts.
Fig. 4.3: Electrical energy flow in USA (million MW)
From these reasons is likely to interpret that the price of electricity varies not only from the
power plant that generates it but also from the distribution distance that energy flows until
reaching local utilities to supply the cities or industries.
5. Electricity Prices and Solar radiation
As a result of different conditions for generation and distribution of electricity, its price varies
significantly according the location where is consumed.
The next three pictures summarize the retail prices found in average during year 2011 in the
USA’s states for the different scales (residential, industrial and utility), in which the states are
clustered in 8 groups according to the range of their prices in order to have a clearer
understanding of the existing variations.
Solar Market and Business Management | Dr. Christine Wörler
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Technische Universität Berlin
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Fig. 5.1: Retail prices (groups) for residential scale in the USA
Fig. 5.2: Retail prices (groups) for industrial scale in the USA
Fig. 5.3: Retail prices (groups) for utility scale in the USA
Solar Market and Business Management | Dr. Christine Wörler
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Technische Universität Berlin
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From these pictures must be highlighted the wide existing difference between the highest retail
price that can be found and the lowest in each of the scales. Just to mention in the case of
residential scale the highest retail price (28.81 €cents/kWh) is almost 400 % the lowest (6.06
€cents/kWh).
Analyzing these variations is likely to assume that the regions in which nowadays electricity
price remains high will be the first to be reached by the grid parity with solar levelized cost of
electricity in further years.
Nevertheless for that assumption the solar radiation in each location must be taken into account.
The next picture shows the solar irradiation in average during one year on the USA.
Fig. 5.4: Average Solar irradiation per year on the USA (comparing with Spain and Germany)
From analyzing the solar irradiation on the USA is found that many of the regions with highest
retail prices for electricity have good radiation levels if comparing to Spain as reference, while
even Alaska is likely to be compared with Germany.
6. Levelized Cost of Electricity

As mention in the main assumptions section from this document, for practical purposes
the solar radiation on the USA is considered to be of 20% taking reference from the
NREL capacity factor map
(http://nreldev.nrel.gov/analysis/lcoe/includes/images/pv_cap_factor_ac.jpg)

As well the next system prices are considered, taking them from the 2010 NREL study
“Residential, Commercial, and Utility-Scale Photovoltaic (PV) System Prices in the
United States: Current Drivers and Cost-Reduction Opportunities”
(http://www.osti.gov/bridge) please refer to next page to see table with detailed considerations
from the study.

Furthermore for the given system price of utility scale in the mentioned NREL study a 25%
reduction was still considered as the Energy Information Administration of the US
Department of Energy reports this adjustment for solar power plants installations cost
(http://www.eia.gov/oiaf/beck_plantcosts/)

Finally in order to obtain the levelized cost of electricity the available simple model
calculator from the NREL webpage was employed considering the mentioned
assumptions and prices. (http://www.nrel.gov/analysis/tech_lcoe.html)
Solar Market and Business Management | Dr. Christine Wörler
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Technische Universität Berlin
Global Production Engineering
(1 US$ = 0.79 Eur)
Fig. 6.1: Summary of system prices and levelized cost of electricity in residential, industrial and
utility scale.
7. Grid Parity Projection
Taking into consideration the levelized cost of electricity calculated from the given assumptions
a comparison with the current retail process takes places in order to project grid parity in further
years. For this purpose it is projected a reduction of 8% per year for the system price in all
scales (residential, industrial and utility) as a result of the learning curve in PV technology prices
while an increase for the retail price of grid electricity of 4% per year for the residential scale, 4%
per year for industrial and 2% for utility are considered according to the last years trend (From
2003 to prices from March 2012). Additionally a trend forecasted for electricity prices by the EIA
was considered in order to compare the grid parity with the best scenario to keep normal grid
electricity prices low.
The following plot is shown as example for the grid parity projection at residential scale for the
states of cluster C: (New York, New Jersey, Connecticut and Vermont).
Solar Market and Business Management | Dr. Christine Wörler
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Technische Universität Berlin
Global Production Engineering
Fig. 7.1: Projection of Grid Parity Residential scale Group C
The following plot is shown as example for the grid parity projection at industrial scale for the
states of cluster C: (New Jersey, Massachusetts, Rhode Island, Maine and New Hampshire).
Fig. 7.2: Projection of Grid Parity Industrial scale Group C
The following plot is shown as example for the grid parity projection at utility scale for the states
of cluster C: (Massachusetts, Connecticut and New Hampshire).
Fig. 7.3: Projection of Grid Parity utility scale Group C
Solar Market and Business Management | Dr. Christine Wörler
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Technische Universität Berlin
Global Production Engineering
The following plot is shown as example for the grid parity projection at residential scale for the
states of cluster A: (Hawaii). (EIA forecast is not considered due it is weighted with other states
as California)
Fig. 7.3: Projection of Grid Parity residential scale Group A
8. Political Framework
Nowadays a wide range of political regulations are taking place as a result of the increase
competition for electricity generation and distribution.
These are some of the relevant issues that frame competition and development for solar energy
in current years.




Retail choice program: Adoption of electric retail choice programs that allow end-use
customers to buy electricity from competitive retail suppliers.
State Incentives: California Solar Initiative is a program that offers cash back for
installing solar on your home or business.
States Policies: Solar Renewable Energy Credits (SREC’s) on states with Renewable
Portfolio Standard aim to allocate certain generation of electricity from solar installations.
Federal Incentives: Business Energy Investment Tax Credit (ITC). 30 % tax credit from
renewable equipment.
www.nrel.gov/docs/fy12osti/51847.p
df
9. Projection PV utility scale
Fig. 9.1: Installed solar power capacity in year 2010 per country (2.5 GW USA)
Solar Market and Business Management | Dr. Christine Wörler
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www.nrel.gov/docs/fy12osti/51847.p
df
Technische Universität Berlin
Global Production Engineering
Fig. 9.2: US cumulative PV capacity until year 2010 (2.5 GW)
The installed PV capacity in USA has grown almost exponentially as the grid parity approaches
and the utility scale is projected to increase significantly by year 2025 around 8 times from its
current capacity of approx. 1 GW.
PV
Country
USA
Status
Expected Completion
Operating
Total Operating
Under Construction
Operating
Total Under Construction
Announced
CSP
Nominal power
(Capacity MW)
Plants
423
423
50
628
600
1,320
2,598
223
576
1,418
1,560
961
2,700
1,799
9,237
12,258
9
9
1
3
1
2
7
3
5
5
2
3
1
4
23
39
2012
2013
2014
2015
2012
2013
2014
2015
2016
2025
No Date
Total Announced
Total general
Nominal power
(Capacity MW)
Plants
508
508
8
8
650
360
2
2
1,010
4
5,099
5,099
6,617
25
25
37
Total Nominal
Nominal power
(Capacity MW)
930
930
50
1,278
960
1,320
3,608
223
576
1,418
1,560
961
2,700
6,898
14,336
18,874
Plants
17
17
1
5
3
2
11
3
5
5
2
3
1
29
48
76
Fig. 9.2: US utility grid-connected PV capacity currently and projection until year 2025
10. Conclusion Solar Market
1. US Solar Market is increasing at all scales (residential, industrial and utility), mainly for
two reasons:
 Grid Parity approaching. As shown in the example plots from section 7,
according to the trends in last years for increase in retail electricity price and for
reduction in PV technology price as a result of the learning curve in its industry,
the grid parity is very likely to occur in this decade for the major part of the USA
territory. In fact for the Hawaii state grid parity seems to be already reality while
for states as Connecticut grid parity will be reached in year 2015 or before.
 Facilitation of solar technology deployment. As mentioned in section 8
several dynamic political regulations and incentives are being introduced in
order to gradually carry on the transition for solar technology deployment.
Solar Market and Business Management | Dr. Christine Wörler
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Technische Universität Berlin
Global Production Engineering
2. The potential of USA market from economical, consumption, natural resources, and
research and development capacity points of view indicate it could become the biggest
solar market in the world.
3. Despite of the extreme optimistic forecast of the Energy Information Administration (EIA)
from the US department of Energy (DOE) the lowering for solar technology prices tend
to reach grid parity in two years average after the year estimated in this document for
the current retail process trend to increase.
4. In order to obtain a higher accuracy for grid parity estimation there must be done a
detail research for each of the states of the USA and avoid the clustering of them when
comparing retail electrical prices in different scales.
11. References

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



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http://en.wikipedia.org/wiki/United_States
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)
http://www.eia.gov/totalenergy/reports.cfm?t=182
http://en.wikipedia.org/wiki/List_of_countries_by_energy_consumption_and_production
http://www.eia.gov/energy_in_brief/power_grid.cfm
http://www.eia.gov/oiaf/beck_plantcosts/
http://www.eia.gov/todayinenergy/detail.cfm?id=4270
http://www.nrel.gov/analysis/tech_lcoe.html
http://www.osti.gov/bridge
http://www.eia.gov/oiaf/aeo/tablebrowser
http://dsireusa.org/
http://www.eia.gov/oiaf/aeo/tablebrowser/#release=EARLY2012&subject=2EARLY2012&table=2-EARLY2012&region=1-0&cases=early2012-d121011b
http://www.nrel.gov/docs/fy12osti/51847.pdf
http://205.254.135.7/forecasts/aeo/er/pdf/0383er(2012).pdf
http://www.eia.gov/electricity/monthly/
http://www.gosolarcalifornia.org/csi/index.php
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USA Solar Market|Jesús Martínez
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