I had the opportunity to speak at both the European and North American Intersolar conferences this year. The contrast between the two events provided some interesting insights into the transitional state of the industry and perhaps a glimpse of the future for the North Amerian solar market.
In Munich, I gave a presentation on some of the key differences in developing and financing projects in Europe compared to the US. It highlighted one of the key things we've learned from our efforts in Germany and Spain--that the developer skill set required to succeed varies depending on market structure and incentive regime. Renewable Energy World also interviewed me on the same topic. In short under a feed-in tariff regime like those in Europe and Canada, the primary development risks boil down to site control, interconnection, and system cost. Compare that to the US where successful developers also have to excel at power marketing, regulatory relations, and tax-oriented finance. This insight explains in large part why many successful European developers are stymied by the US solar market.
In San Francisco, I shared the stage with Laura Spanjian, Assistant General Manager of SFPUC (for whom we're building a 5MW project later this year). The focus of our presentations was on the benefits of the solar Power Purchase Agreement (PPA) approach for municipal utilities--avoided capital cost, access to federal stimulus funds, greater flexibility and diversity of power sources, and lower levelized cost of electricity (LCOE). We also talked about some of the challenges we faced getting political approval for a project that was initially considered a "slam dunk" in a progressive city like San Francisco.
The European show is billed as the "world's largest solar technology trade fair" and you feel it--60,000 attendees and 1400 exhibitors pack 104,000 m2 in Munich's Trade Fair Center. The sheer scale of the event reflects the current dominance of Germany and Spain as the worlds #1 and #2 markets. However, with declining tariffs in Germany, a cap on Spain, and uncertainty in project finance markets, most conversations turned hopefully to the US as the next driver of growth.
There was near unanimous opinion that the US would eventually be the world's largest solar PV market, but a great deal of head-scratching about when and how. To European players attempting to enter the US, the market is a confusing patchwork of regional markets and regulatory environments. Combined with tax-oriented finance, it's easy to see why new entrants have a hard time assessing strategy and finding market traction.
The North American show, in its second year, is quite a bit smaller attracting just 17,000 visitors. The mood seemed to mix optimism about the medium-term US market potential with a fair amount of nail-biting about the lagging state of various federal programs and capital markets. Large project announcements in recent months indicate a sea change underway in the scale that US utilities are procuring solar. It's also clear that the massive decline in solar module costs is stimulating a lot of development activity and opening up new markets--suggesting a volume of demand that is entirely new in North America. However, until the regulatory and project finance fog clears there is very little of that potential that is going to find its way into orders for modules and equpiment.