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Mid-Size Solar PV Installations Accounting for over 60% of US Project Pipeline

The trend for U.S. solar PV projects in the mid-size range (100 kW to 2 MW) has been changing considerably, from individual installations (on municipal or school buildings, for example) to multi-site projects. As opposed to previous single-site developments, project master plans now embrace the bigger picture, outlining the needs of an entire town, county, or school district. Typically, contracts cover everything from development to operations and maintenance of the system for up to 25 years, often with no cost to the host for installation.

Also, while previously there were often contingency plans to extend projects in later years, this is rarely discussed now, unless part of a larger plan already in development. Once an installer is on-site, the aim is to get as much power as possible, to complete the project quickly, and to reap the benefits with a steady return on investment.

Enthusiasm for mid-size range PV installations developed and owned by a third party is particularly strong for municipalities and educational institutions. Because many cities, government entities, and schools are unable to take advantage of tax breaks, developers have been quick to step in with third-party ownership in states where such ownership models are allowed. In such a model, the host leases space to the developer and pays no upfront cost for the solar installation. Electricity is received through a power purchase order at a fixed or fluctuating rate as determined by the contract. The developer then owns and maintains the system, and claims the tax incentives.

The new ownership models and increasing scope for PV projects have developed in parallel. Now, rather than a city/municipality looking at each site as an individual project, such as a library on one side of town and a fire station on the other, these projects are being looked at as one master project, meaning bigger overall projects/contracts, even though each PV array is similarly sized and located at different sites. This type of project can help bring down soft costs as multiple arrays can be bid out as one project and installers can capitalize somewhat on economies of scale when purchasing components.

These models are also leading to the emergence of community-based solar, where community members can purchase ‘shares’ of a PV project to offset their own electricity use even though they are not able to act as hosts. As more areas begin to allow this type of ownership there is a significant potential for further growth in the mid-size project pipeline. In many ways, this is a brand new growth opportunity for the downstream PV market as customers that might be interested in solar, but unable to install it due to living style (e.g. apartment buildings), will be able to invest and in larger-scale systems.

Source: US Deal Tracker

This article was originally published on NPD Solarbuzz and was republished with permission.

 

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