The US PV Market Holds Promise for Foreign Companies

Over the next couple years the growth rate of the U.S. PV market will undoubtedly surpass that of more established markets such as Germany, Italy and Spain, making it one of the leading PV markets in the world.

As it matures, the U.S. can learn a lot from the experience of other markets and set a policy framework that ensures a positive return on investment for investors and sustainable growth of the PV industry.

The example set by Spain as of September 2008 shows what not to do – proving that direct incentive programs can be so effective that they quickly backfire with severe consequences. The U.S. PV market, primarily based on tax credits, RPS solar carve-outs and RECs (SRECs) instead of direct subsidies, is already avoiding some of the pitfalls made elsewhere and in some states is providing a stable and supportive regulatory framework for the long-term. The Obama administration has also sought to facilitate access to debt financing by providing extensive guarantees.

There are four basic themes that will play a big role determining the continuous growth of the U.S. PV market: stability in the policy framework, access to financing, PV technology improvements, and developments in smart grid technology. These themes will be crucial in pushing the market towards the tipping point: grid parity.

Given the experience and know-how that European PV companies have gained in their domestic markets, particularly Spain and Germany, it is not surprising that there is a significant rush to participate in the growth of the U.S. market. The rush by Spanish firms has been particularly pronounced due to the state of paralysis of the Spanish market since September 2008.

Indeed, almost half the federal aids granted in 2009 (to the tune of US $1.5 billion) were delivered to Spanish companies. Examples of Spanish PV firms making bets on the U.S. market include Siliken SA, which opened a solar module manufacturing plant in California in 2008 (Siliken California Corp), Iberdrola Renovables, which has recently announced the construction of two 50 MW PV projects in Colorado and Arizona, and many others (note: link leads to an article in Spanish).

Entering the U.S. market, however, is not easy and there are significant risks. Companies planning to enter this U.S. market must first understand all aspects of it: regulatory, economic, technological and operational. A further layer of complexity is added by the nature of the U.S. political system, which effectively fragments the United States into 50 individual markets, each with its own incentive and legal structure.

Consequently, despite the attractiveness of the U.S. PV market, any company looking to do business in America must measure its steps carefully in order to be well-informed prior to embarking on this adventure: the conquistadors who chased El Dorado are not to be emulated.

These topics will be discussed in detail in the four roundtables that Eclareon will moderate during the PV Power Plants 2010 Conference organized by Solarpraxis in Las Vegas on December 1st and 2nd. 

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Jose Ignacio Briano, Partner (Madrid office) holds a Bachelor of Arts in Philosophy, Politics and Economics (University of Oxford, UK, 1999), a Master in Business Administration (INSEAD, France, 2007). Previous professional activities include Merrill Lynch (Global Capital Markets) in London and New York, L.E.K Consulting in London and Los Angeles and Roland Berger Strategy Consultants in Madrid. As a management consultant Jose Ignacio has covered a wide range of strategic assignments across various industries, including energy distribution and wind energy. Jose Ignacio joined the Madrid office of Eclareon in 2009

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