First Solar, the largest solar panel firm in the US, is pursuing smaller projects and customer-sited systems. This is in response to utilities’ growing need for smaller solar installations. This is predicted to increase the firm’s sales by 36% over the following three years. The firm predicts that earnings will grow from US$4.50 to US$6 a share in 2015 from US$2.20 to US$2.60 this year.
First Solar expects to use its thin-film cadmium-telluride panels for the new smaller projects.
The firm also intends to target sales of solar panels to mine operators in remote areas and other industries that currently rely on diesel generators. By adding panels nearby, companies will save on fuel costs. At one location, First Solar installed 10MW megawatts of solar panels to accompany 15.3MW generated by a diesel-fueled generator. This will save them 85 million liters of fuel over the next 25 years. Its reliability is yet to be proven.
Last year, the firm obtained 65% of its sales from selling large solar farms to utilities. However, the market is showing signs of slowing down in the US. Power companies are responding to state requirements and don’t need to buy more solar energy.
Booming Rooftop Market
Installations at large-scale solar farms in the US are expected to grow at a compound annual rate of eight percent from 2013 to 2016, according to a January report from Goldman Sachs Group Inc. The booming rooftop market will swell by 45% over the same period.
A few US utilities have discovered they can save money by encouraging small rooftop solar projects—the same projects utility industry leaders have insisted were too costly and unreliable to be practical.
The Long Island Power Authority (LIPA) in New York, for instance, is paying developers to build solar panels on top of buildings in small towns that are growing fast and don't have enough electric grid infrastructure to bring in the electricity needed. The pilot initiative means that the utility won’t have to spend over US$80 million on new transmission lines and grid equipment. According to Michael Deering, LIPA vice president of environmental affairs, it is actually more cost-effective to add renewables this way.
Distributed generation is shaking up the old model
The traditional utility made their money by investing in infrastructure—mainly massive centralized power plants and high-voltage transmission lines—and then charging customers enough to earn that money back with a guaranteed return. Distributed generation is shaking up this old model by giving more control to smaller developers, communities or individuals, who produce power onsite and are less reliant on the traditional grid infrastructure.
There are many utilities that still view distributed generation as a liability. Many utilities have resisted distributed generation in the past since they believed that small projects would cut into their profits. In addition, utilities are faced with the hassle of managing grid instability from a high penetration of solar power and distributed-connected buildings, which give power to the grid and take from it on cloudy days or at night. Utilities worry that an influx of distributed solar will negatively affect voltage, power quality and other grid conditions that allow electricity to flow smoothly and reliably [Distributed Generation Complicates Resource Planning.]
However, the shift in focus from large-scale to small-scale projects reflects some utilities' changing attitude towards distributed generation as opportunities are recognized.[Distributed Generation Opens a Floodgate of Opportunity.]
Utilities Embrace Distributed Generation
The amount of US distributed solar is expected to boom as rooftop solar (and its installation) becomes increasingly affordable [Cheaper Solar Installations-Watershed Moment for Distributed Generation and Renewables]. Concerns surrounding climate change is also a major driver.
Major US municipal utilities, such as the Los Angeles Department of Water and Power and Austin Energy in Texas, are also turning to distributed generation to improve grid operations. Utility Duke Energy in Charlotte, NC has spent US$50 million in recent years to build 10MW of distributed solar across North Carolina, mostly on industrial buildings
Distributed solar can help the utility contribute to a country’s renewables goal, it encourages job creation, and defers hefty capital grid investment. In Germany, distributed generation has been key to the country’s clean energy plan: Energiewende. Almost half of the country’s renewable power is owned by private individuals or farmers, while in the US, customer-owned generation accounts for less than five percent of the clean energy market.
In its report on the financial risks to utilities of locally produced power, the Edison Electric Institute said, "Participants in all industries must prepare for and develop plans to address disruptive threats, including plans to replace their own technology" with alternatives.
"Ultimately, all stakeholders must embrace change in technology and business models in order to maintain a viable utility industry," the report added.