Completed 2010 Non-Residential Photovoltaic (PV) installations are down almost 27% versus the same period of 2009.
Is the application pipeline setting up for a record first half 2011?

For my EU PVSEC presentation, I decided to forgo state forecasts and instead provide 2010 market updates. When I reviewed the CSI (California Solar Initiative) Applications by Month at the California Solar Statistics website, I discovered the Non-Residential installation run rate gap. Using the latest data from September 22, 2010, the 50.8 MW (MegaWatt) of year to date 2010 Non-Residential installations lag the 64.5 MW installed the prior year through September 2009 as shown in the California Non-Residential Solar Installations chart. Another eight days of data is needed for strict comparability, but installs have lagged throughout 2010. The Non-Residential segment includes Commercial and Government / Non-Profit solar PV installations.

The ironic primary cause of the gap was a strong first quarter 2009 for CSI Non-Residential installations during the economic crisis. Projects financed before the economic crisis resulted in a record 18.9 MW of Non-Residential CSI installations completed in January 2009.

The Non-Residential Application pipeline also plays a role in the timing of completed installations. In “The CPUC’s CSI in Pictures: An update through March 2010”, SunCentric Inc. CEO Glenn Harris said:

• It takes about 350 days to complete a Non-Residential project and about 180 days to complete a Residential project.
• Non-Residential demand may now be building (we hope). The picture will be clearer in a few more quarters.
• Because of CSI project drop out rates, California, national and global factors, increases in demand now do not guarantee a sustained increase in completed MW in the future.

While the April 109.8 MW spike in 2010 Non-Residential applications was reported via many outlets, the 350 day average project duration implies these applications will not result in completed projects until the first quarter 2011. Per the “California Solar Initiative Progress Report March 2010 Data Annex” report:

The CSI dropout rate is currently about 18.7%. As of 12/30/2009, about 18.7% percent of reserved MW has dropped out of the Program, representing 19.9% of reserved incentive dollars. This average dropout rate was calculated from the Public Data Export, which draws on data from the 12/30/2009, PowerClerk data, and includes only those applications that have ever been granted a CSI reservation (non-blank “Reservation Reserved” or “Confirmed Reservation” or “Pending RFP” date for non- residential projects, and non-blank “Confirmed Reservation” date for residential projects).

Therefore, the raw CSI Non-Residential application dropout rate is even higher than Confirmed Reservations.

What triggered the April 2010 Non-Residential application spike?

I postulate two main causes for the pseudo blow-off top in CSI Non-Residential applications. First, developers were concerned efforts to extend the Treasury Grant program beyond 2010 would not succeed this year. April 2010 applications had reasonable expectations to meet US Treasury “begin construction” criteria by December 31, 2010. In the California Non-Residential Solar Applications chart, September 2010 Non-Residential applications are again near 2009 levels.

Second, CSI Non-Residential PBI (Performance Based Incentive) levels have been dropping and according to the CSI Statewide Trigger Point Tracker are at Step 8 for Pacific Gas and Electric Company (PG&E) and Step 7 for Southern California Edison (SCE) and the California Center for Sustainable Energy (CCSE), the administrator for San Diego Gas & Electric Company (SDG&E) customers. The CSI PBI Payments per kWh (kiloWatt-hour) for Non-Residential Steps 7 and 8 are shown at the bottom of my EU PVSEC California PV Market slide. I understand clever developers began focusing on Government / Non-Profit solar installations to benefit from the additional $0.10 per kWh PBI.

In turn, the unexpected PBI skew towards the higher Government / Non-Profit levels created a Stop and Go policy situation at the CPUC (California Public Utilities Commission) as they considered CSI program changes. For further details, please see “CPUC Solicits Comments on CSI Budget: Update July 29, 2010: New Assigned Commissioner’s Ruling Lifts Hold on PBI, Government/Non-profit Incentive Processing”. The twenty (20) day Government / Non-Profit reservation suspension has no doubt decreased application interest since July 2010.

The September 16, 2010 presentation on the Status of the CSI Program (“California’s Solar Market”) by Molly Sterkel, CPUC Energy Division, observes CSI Installed and Pending Projects account for $1,432 million of the $1,701 million CSI budget and concludes with a “Post-CSI?” slide including the bullet point, “Lower steps cost program least, expected to obtain the most MWs”. Let’s hope so or a tough and not so sustainable solar PV market may unfold in the second half of 2011 or in 2012.