A couple of weeks ago, I published an article examining the top utility-scale PV project developers in the United States, using data from the national database of utility-scale projects we maintain at GTM Research. This time around, let's cut the same data by state to determine which states are home to the largest utility-scale pipeline. In the U.S., every state constitutes its own unique PV market with its own set of incentives, solar generation requirements, electricity prices, and regulatory quirks.

But the states that lead the utility-scale market have a few things in common. And as excitement over the U.S. utility-scale market heats up, this classification can help determine where demand will next ramp up. 

As before, note that we try to include only projects that have a reasonable chance of success given their current stage of development and their developer's track record. This cuts the 10+ GW of project announcements down to 2,722 MW that are likely to begin operation over the next four years.

Source: GTM Research

California: A League of its Own

California accounts for 1,717 MW, or 63 percent, of the total pipeline. This is almost exactly in line with California's share of the total U.S. market in 2008 (62 percent), but above what we expect its total market share to be going forward. In our December 2009 report on the U.S. PV market, we projected that California's overall market share would fall to 54 percent by 2012 as secondary state markets such as New Jersey, Arizona, New Mexico and Nevada soak up additional demand.

This suggests that the utility-scale PV market will be slower to migrate away from California than will the market for distributed generation. In the near term, California's DG market share will fall as new states ramp up capacity and introduce incentive programs. However, at the same time, the utility-scale market will actually become increasingly concentrated in California. For now, California utilities have more experience signing utility-scale solar PPAs, they are still at the forefront in terms of utility-owned generation models, and California's RPS remains among the most aggressive in the nation. In the longer term, though, expect the utility-scale market to mimic the market for DG and increasingly extend outside California's borders.

Nevada and New Mexico:  Emerging Western Giants

The second-tier states, far behind California but rising high above the rest, are Nevada and New Mexico. Both states have high insolation and strong RPS standards with solar-specific carve-outs. Together they account for 659 MW, or 38 percent of the pipeline in development.

Nevada's RPS requires 25 percent renewable energy by 2025, with interim targets every two years through 2015 and every five years thereafter. Solar power is required to comprise six percent of that target, or 1.25 percent total, by 2025. Nevada also benefits from being adjacent to California, as projects in Nevada can sell power to California utilities. This will become increasingly important once tradable RECs (TRECs) are introduced in California later this year, since California utilities will be authorized to meet a portion of their RPS requirement through out-of-state TREC purchases.

Among the many projects planned for Nevada is the 150 MW Boulder City Solar project planned by Nextlight Renewable Power. The project is being developed on a reserved "Energy Zone" designated by the city of Boulder City to support renewable energy development, which will ease the permitting process. Construction is anticipated to begin this year and be completed in 2013.

New Mexico is one of my favorite states for PV market growth. Despite having just one MW installed by the end of 2008, New Mexico is quickly shaping up to be a national PV leader. The state's RPS mandates 20 percent renewable energy by 2020, of which 20 percent must be solar power and an additional three percent must be distributed generation. As a result, New Mexico's effective 4.6 percent solar requirement by 2020 is the highest in the nation. And over the past few months, project announcements have piled up to create a large, but realistic, 402 MW pipeline. These include 55 MW to be developed by SunEdison, 300 MW by GA-Solar, and two separate First Solar projects.

Arizona, New York, North Carolina, Maryland, and Colorado: RPS Carve-Out States

Seven of the top ten states, including these five as well as New Mexico and Nevada, share a common state policy: an RPS with a specific requirement for solar power or distributed generation (note: distributed generation can count as utility-scale solar too, as long as it's connected on the utility side of the meter). This policy is currently the biggest driver for utility-scale PV in the United States. Most state RPS requirements are back-loaded and require rapid scale-up in later years. In order to ensure future compliance, utilities are increasingly choosing to sign PPAs or to own large-scale PV assets rather than relying on rebates and other incentive programs to spark smaller distributed demand.

RPS Solar requirements: North Carolina (0.2 percent by 2018), Maryland (2 percent by 2022), and Colorado (0.8 percent by 2020)

RPS distributed generation carve-outs: Arizona (4.5 percent by 2025) and New York (0.13 percent by 2013)

Florida and Texas: States with aggressive individual utilities

Florida and Texas fall into the final category: states with individual utilities that have signed utility-scale PPAs in the absence of a statewide requirement.

In Florida, a number of utilities have announced projects. FPL has a 10 MW project in the works to complement its existing 25 MW DeSoto NextGen Solar Center, the largest in the U.S. In addition, municipal utilities Jacksonville Electric Authority (JEA) and Lakeland Electric have signed PPAs for utility-scale PV projects. And Tampa Electric has plans to buy the power from a 25 MW project to be constructed by 2011.

In Texas, three municipal utilities have taken the lead. The City of Houston will purchase electricity from a 10 MW NRG project. Austin Energy will buy the output of Gemini Solar's first project, a 30 MW facility expected to be completed this year. And CPS Energy in San Antonio has signed a PPA with a 14 MW project in development by juwi Solar.

The trend to note here is the prevalence of municipal utilities, whose regulatory approval processes are generally less arduous than those of investor-owned utilities. While a municipal utility reports to a municipal board, an investor-owned utility is governed by a state public utilities commission. Though not always the case, municipal boards are often more willing to take on the perceived risk of utility-scale PV projects in order to support solar project development and local job creation.

What to Make of the Breakdown

So where will the utility-scale PV market will develop?

First and foremost, in and around California. Demand will be supported by increasing RPS requirements in Western States, tradable RECs in California, and increasing prevalence of utility-owned generation. Second, in states with strong RPS carve-outs for solar or distributed generation. Utilities will continue to seek long-term PPAs for large-scale PV projects in order to ensure regulatory compliance. And third, in locations where municipal utilities issue RFPs for utility-scale projects. These RFPs will often be smaller than those issued by investor-owned utilities, but there ultimately may be a greater number of them to go around.