The Market in the U.S.
Booming market in the U.S. – the energy turnaround is under way
The southwestern United States offer excellent conditions for solar power plants: sun and space in abundance as well as high electricity demand. Many of the suitable locations, with direct normal radiation of up to 2,700 kWh per square meter, are located in the direct vicinity of densely populated areas with correspondingly high energy demand and the relevant infrastructure. The prevalent use of air-conditioning boosts electricity demand, particularly in the hottest hours around noon and the afternoon. Solar power plants help satisfy this peak demand, as this is precisely the time that the plants reach their maximum efficiency.
Good framework conditions – the key to success
One important prerequisite for strong market growth is that the general regulatory conditions make the construction and operation of solar plants economic and attractive, for example via direct subsidies or tax relief measures. Government promotion instruments and the granting of loans by several American institutions as well as the provision of loan guarantees by the Department of Energy shows the political will of the U.S. government to take a leading role in the field of renewable energy sources.
Since the start of the Obama administration in January 2009, the subsidization of regenerative energy in the U.S. has been one of the government’s specific goals, with a legal framework adopted in 2009 in the American Recovery and Reinvestment Act. A significant share of the U.S. stimulus package amounting to USD 790 billion went to the promotion of renewable energy.
The so-called Renewable Portfolio Standards stipulate different targets for covering power generation using regenerative sources for the individual states. California plans to require utility companies to cover 33% of their power generation with renewable energy sources by 2020.
In addition, solar power plant projects in the U.S. can benefit from tax incentives in the form of Investment Tax Credits. Investors subject to taxation in the U.S. can deduct up to 30% of their investments in solar power plants from their individual tax payments. In October 2008, when President George W. Bush was still in office, the House of Representatives extended this solar energy subsidy by eight years, thereby making it valid through 2016. In addition, this regulation was extended to cover utilities as well, thus giving them another incentive to invest directly in solar power plants. This regulation is particularly beneficial to Solar Millennium, as the sale of project shares and the involvement of strategic investors are components of the business model and make it easier to finance the power plants.
Timely occupation of the pole position – the Solar Millennium Group in the U.S.
The Solar Millennium Group has been represented in the U.S. with its own project development company, Solar Millennium LLC (since July 2011 STA Development), for several years. In the course of expanding its staff, the company moved its headquarters to Oakland in 2010. In addition, it founded the joint venture Solar Trust of America LLC in mid-2009 to better cultivate the U.S. market. Solar Millennium AG holds 70% of the shares in this joint venture. In addition to the business field of project development, the company is also active in the areas of project financing, engineering, power plant construction and the operation of power plants in the U.S., thereby covering all important steps along the value chain of solar power plants.
The Solar Millennium Group simultaneously developed several projects in the southwestern states. The planned power plants are far larger than the ones Solar Millennium developed and realized in the south of Spain.
The Blythe and Palen locations in California as well as the Amargosa location in Nevada have already entered advanced stages. While a total of four power plants are to be realized at the Blythe location, two power plants each have been projected in Palen and Amargosa.
With a potential capacity of some 1,000 MW, Blythe is the world’s largest solar power plant location, thereby tapping into the dimensions of nuclear power plants. Together, the four power plants are to supply enough electricity for 300,000 American households, thus saving roughly one million tons of carbon dioxide per year. In August 2011 Solar Millennium decided to build the first 500 MW of Blythe as a photovoltaic power plant. Here you find the press release.
The Solar Millennium Group’s market position in the U.S. is extremely promising overall. This is due to the fact that Solar Millennium was one of the first companies to commence market entry and project development in the southwestern United States, with the result that several projects are already in the very advanced stages.