#1ONREL NATIONAL RENEWABLE ENERGY LABORATORY 10 Spring 2023 Solar Industry Update David Feldman, NREL Krysta Dummit, BGS Contractor for SETO Jarett Zuboy, NREL Robert Margolis, NREL April 27, 2023 Photo by Werner Slocum, NREL 74637#2Agenda 1 Global Solar Deployment 2 U.S. PV Deployment 3 PV System Pricing 4 Global Manufacturing 5 Component Pricing 6 Market Activity 7 U.S. PV Imports NREL 2#3Executive Summary Global Solar Deployment . IEA reported that in 2022, 231 GWdc of PV was installed globally, bringing cumulative PV installs to 1.2 TWdc. China's annual PV installations grew 57% y/y in 2022, representing 42% of total global demand, with the majority coming from distributed PV. The U.S. was the second-largest market in terms of cumulative and annual installations. Analyst project 2023 annual installations to grow to more than 300 GW and by 2025 more than 400 GW. U.S. PV Deployment . • In 2022, PV represented approximately 46% of new U.S. electric generation capacity, compared to 4% in 2010. Solar still represented only 9.0% of net summer capacity and 4.7% of annual generation in 2022. However, 16 states generated more than 5% of their electricity from solar, with California leading the way at 27.3%. The United States installed 17.0 GWac (20.2 GWdc) of PV in 2022, ending the year with 110.1 GWac (140.6 GWdc) of cumulative PV installations. The United States installed approximately 14.1 GWh, 4.8 GWac of energy storage onto the electric grid in 2022, up 34% y/y. PV System and Component Pricing • The median system price for a select group of utility-scale PV projects in 2022 was $1.49/Wac-up 13% y/y. The median reported price by EnergySage for residential PV systems increased 6.3% y/y to $2.85/Wdc - the third straight period of increase, after never having done so before. After plunging to a 1.5-year low of $20/kg in mid-January, global polysilicon spot prices rebounded to $30/kg in mid-February and then dropped to $24/kg by mid-April. Global module prices have declined steadily since fall 2022 despite strong demand, reaching lows in April 2023 that have not been seen for 2 years. Global Manufacturing • In 2022, global PV shipments were approximately 283 GW-an increase of 46% from 2021. In 2022, 96% of PV shipments were mono c-Si technology, compared to 35% in 2015. N-type mono c-Si grew to 51% - up from 20% in 2021 (and 5% in 2019). In 2022, the United States produced a around 5 GW of PV modules. U.S. PV Imports • According to U.S. Census data, 28.7 GWdc of modules and 2.5 GWdc of cells were imported in 2022, an increase of 21% y/y (+5 GW) and 7% y/y (178 MW), respectively. Collectively, Malaysia, Vietnam, Thailand, and Cambodia represented 73% of c-Si module imports (75% including c-Si cells). According to U.S. Census data, 2.5 GWdc of cells were imported in 2022. Quarterly cell imports grew for the second quarter in a row in Q4 2022 (+60 MWdc, +9% q/q). In 2022, only 10% (2.7 GWdc) of modules reported a tariff, compared to 56% (13.2 GWdc) in 2021. NREL | 3 A list of acronyms and abbreviations is available at the end of the presentation.#4Agenda 1 Global Solar Deployment 2 U.S. PV Deployment 3 PV System Pricing 4 Global Manufacturing 5 Component Pricing 6 Market Activity 7 U.S. PV Imports • IEA reported that in 2022, 240 GWdc of PV was installed globally, bringing cumulative PV installs to 1.2 TWdc. - - China's annual PV installations grew 93% y/y in 2022, representing 44% of total global demand, with the majority coming from distributed PV. The U.S. was the second-largest market in terms of cumulative and annual installations. Analysts project 2023 annual installations to grow to more than 300 GW and by 2025 more than 400 GW. • At the end of 2022, global CSP capacity reached approximately 6.4 GW, with 1.3 GW under construction. NREL 4#5500 450 C • Top PV Markets The leading 10 markets in terms of cumulative capacity remained relatively unchanged between 2021 and 2022. Brazil jumped ahead of Vietnam for the 10th spot in 2022. 462 Cumulative PV Deployment - 2022 (1,233 GWdc) 120 • • China's annual PV installations grew 57% y/y in 2022, representing 42% of total global demand. In 2022, despite a market contraction, the United States was the second-largest PV country market in terms of both cumulative and annual installations. The EU, however, was the second-largest market, with 209 GWdc of cumulative installations (17% of global installations and 3 countries in the top 10) and 38.7 GWdc annual installations (17% of global installations and 4 countries in the top 10) in 2022. Annual PV Deployment - 2022 (231 GWdc) 400 350 300 250 200 142 150 100 50 38.3 14.3 4.9 3.9 3.9 Australia Netherlands Rest of Europe Rest of World 0 China United States Japan 85 79 India Germany 67 67 30 27 Australia Spain 100 288 96.6 80 60 177 40 91 18.6 18.1 20 25 25 25 24 Note: Chinese numbers were adjusted, assuming Chinese DPV reported Italy S. Korea Brazil Sources: IEA, Snapshot of Global PV Markets: 2023; Trends in Photovoltaic Applications 2022. Rest of Europe at Rest of World 0 China United States India Brazil Spain 9.9 8.1 7.5 6.5 Germany Japan Poland Watts-DC (with an ILR of 1.1) and UPV reported in Watts-AC (with an ILR of 1.3). NREL | 5#620% Percent of Annual Electricity Generation 0% 90 Spain 5% 10% 15% Greece Chile Netherl.. Australia Honduras Israel Germany Source: IEA, Snapshot of Global PV Markets: 2023. 25% Japan India Italy EU • Global PV Penetration IEA estimates that in 2022, 6% of global electricity generation came from PV. • The United States, despite being a leading PV market, is below the global average and other leading markets in terms of PV generation as a percentage of total country electricity generation, with 5%. If California were a country, its PV contribution (28%) would be the highest. Belgium Portugal Denmark Switzerl... Turkey China World Austria Bulgaria Mexico USA Morocco UK S. Korea France Romania S. Africa Czech... Thailand Slovakia Sweden Canada Malaysia Finland Norway NREL | 6#7600 500 Annual Global PV Demand • . About 240 GWdc of PV were installed globally in 2022. Analysts project continued increases in annual global PV installations. 320 GWdc in 2023 PV Annual Installations (GWdc) 400 300 200 100 0 2021 European Union 2022 +10% +12% +16% +33% 2023P 2024P 2025P 2026P Europe (All) ■U.S. India Rest of World China Notes: E = estimate, P = projection. Colored bars represent median projections for region/country-level estimates. Error bars represent high and low global projections. Not all sources have data for all categories. Sources: BNEF, 1Q 2023 Global PV Market Outlook, 2/28/23; Goldman Sachs Equity Research, America's Clean Technology: Solar, 2023 Outlook, 12/18/22; IEA, Snapshot of Global PV Markets: 2022, 4/22; IEA, Snapshot of Global PV Markets: 2023, 4/23; U.S. Energy Information Administration, Annual Energy Outlook 2023, 3/16/23; U.S. Energy Information Administration, Monthly Energy Review, 12/22; Wood Mackenzie and SEIA, US Solar Market Insight, 2022 Year in Review, 3/23. • - 372 GWdc in 2024 418 GWdc in 2025 458 GWdc in 2026. Analysts who provided global projections 1 year ago increased those projections this year (e.g., by 34%-38% for 2025 projections). China, Europe, the United States, and India account for about 70% of global PV installations over the period shown. NREL | 7#8PV Annual Installations (GWdc) 500 400 300 200 100 Change in Recent Global PV Demand Projections 4 +81 GW 3 +34 GW 2 +42 GW 1 261 GW in 2025 0 2020 2021 12022 2023④ 2024 2025 2026 Reported Drivers of Growth in Installed PV Projections 1. Projections in Mid to Late 2021: COVID-19 coming under control, improving supply chains, reduced geopolitical trade risks. 2. Projections in Early 2022: invasion of Ukraine by Russia, increasing desire for energy security, increasing conventional energy prices, improving supply chains, higher national PV targets. 3. Projections in Mid to Late 2022: increasing conventional energy prices, increasing polysilicon supply, declining module prices, adjusting for underestimation of global market in official installation statistics. 4. Projections in Late 2022 to Early 2023: oversupply throughout supply chain, declining module prices, large module inventories, IRA and other U.S. policies, energy cost inflation in Europe, supply chain normalization in China, potentially explosive growth constrained only by local conditions (permitting, interconnection, labor, financing, etc.). Sources: BNEF, Global PV Market Outlook, 11/25/21, 3/1/22, 8/26/22, 2/28/23; Goldman Sachs, Americas Clean Technology: Solar 2021 Outlook, 01/09/22; Goldman Sachs, Americas Clean Technology: Solar, Assessing the Impact of Volatile Macro - Oil, Commodities & EU in Focus, Raise Demand View Thru 2025, 3/29/22; Goldman Sachs, America's Clean Technology: Solar, 2023 Outlook, 12/18/22; NREL, Solar Industry Update, 1/11/22, 4/26/22, 10/27/22, 4/27/23; Solar Power Europe, Global Market Outlook For Solar Power 2021-2025, 7/20/21; Solar Power Europe, Global Market Outlook For Solar Power: 2022-2026, 5/22. NREL | 8#9• Chinese Generation Capacity Additions by Source Note: Based on new information, annual and cumulative solar values now assume that China's National Energy Administration (NEA) reports distributed PV in direct current terms and utility-scale PV in alternating current terms. Sources: China NEA (1/18/23); IEA, National Survey Report of PV Power Applications in China, 2021. In 2022, solar contributed 44% to new generation capacity in China (97 GWdc/82 GWac) and 15% of cumulative capacity (462 GWdc/378 GWac). ― - - - The record for annual solar installed was broken for the second year in a row. In 2022, 61% of new PV was distributed, 39% was utility scale. Wind and solar accounted for 64% of capacity installed in 2022, and together they have constituted the most capacity installed for 7 years running. Annual coal and gas additions fell for the second year in a row, reaching the lowest level in more than a decade. • Renewable sources continue to capture a larger share of China's growing electric capacity. In 2011, renewables made up 26% of 1.1 TW of total capacity. In 2022, renewables made up 45% of 2.5 TW of total capacity. Annual Capacity Additions (GWac) Cumulative Capacity (GWac) Solar ac 250 Hydro Wind Other 3,000 Solar ac Wind 2,545 191 200 Nuclear Coal and Gas 186 2,500 Hydro Other 2,200 178 Nuclear 142 47 2,000 Coal and Gas 1,652 2,011 1,900 2,373 296 378 244 150 121 125 125 123 1,521 111 52 96 15 111 82 1,379 1,777 126 197 168 1,500 100 34 1,063 1,147 1,258 75 41 84 51 42 29 1,000 50 500 0 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 NREL 9#10Chinese Market Update Sources: BloombergNEF, China Will Produce 430 GW of Modules in 2023 Industry Says, 3/8/23; BloombergNEF, China's Rooftops Are Becoming the key to the World's Solar Boom, 3/31/23; China NEA (1/18/23); PV Tech (3/28/23, 3/30/23). • Although China has continued to deploy PV rapidly, headwinds include high supply chain prices, constraints on land development, and lack of transmission from remote PV projects to densely populated areas. • One solution is more rooftop PV-for the second year, China installed more distributed PV than utility-scale PV in 2022. ― Distributed PV now constitutes about 40% of total PV capacity. - The 50 GWac of distributed PV installed in 2022 eclipsed the total renewable energy installed by any other country; about 1 of every 4 modules installed globally in 2022 was on a Chinese rooftop. • - Distributed PV surged in 2021 and 2022 owing to subsidies, lower sensitivity to module price, high electricity rates charged to businesses along with power outages and pressure to decarbonize, and a bulk-buying program for local governments. Challenges going forward include strains from excess PV generation on distribution grids-which is stimulating time-of-use rate structures-expiration of national subsidies in 2021, and higher costs due to requiring storage paired with PV in most provinces. - Another solution is funneling utility-scale PV onto low-value lands-the Chinese government is promoting deployment in desert areas and oil and coal fields while discouraging deployment on farmlands and areas with ecological or cultural value. NREL 10#112 0 64 20 220 18 16 14 12 10 8 2007-2014 Indian Market Update India's Annual PV Capacity Additions (GWdc) ... 2015 2016 2017 2018 2019 2020 2021 2022 Sources: BNEF, 1Q 2023 Global PV Market Outlook, 2/28/23; BNEF, 1H 2023 India Renewables Market Outlook, 2/28/23; Mercom India Research, Q4 & Annual 2022 India Solar Market Update, 2/20/23; Mercom (2/28/23). - - India's annual PV additions achieved a record in 2022 at 13 GWac (18 GWdc), up 27% from 2021. Large-scale projects increased 33% from 2021 and made up 87% of new 2022 PV capacity. Rooftop projects decreased 4% from 2021 and made up 13% of new 2022 PV capacity. PV made up a record 82% of total capacity additions and totaled 63 GWac at year end. Large project costs increased 7.3% in 2022. Costs increased for 10 consecutive quarters mainly owing to higher module prices and supply constraints. PV auction tariffs rose for the first time in 2022, primarily because of the higher equipment costs and higher financing costs. At year end, 58 GWac of large projects were in the pipeline, with another 51 GWac pending auction. NREL 11#12Million U.S. dollars Indian Market Update 600 Value of Indian Module Exports: H1 2022 vs. H2 2022 500 400 300 Exported elsewhere Exported to the U.S 200 100 0 January-June 2022 July-December 2022 Indian module exports jumped more than tenfold between the first and second halves of 2022, with all the increase going to the United States. - - - India's module manufacturing capacity reached 40 GWdc in 2022, but only 10 GWdc was for modules of 500 Wdc or higher. One projection shows India's module manufacturing capacity reaching 110 GWdc by 2026, which is 90 GWdc more than projected domestic installations in that year. The U.S. module market yields higher profit margins than the Indian market. Mid-year U.S. policies (UFLPA, AD/CVD investigation) contributed to demand for Indian modules. Indian module exports to the U.S. totaled about 1.5-2.0 GWdc in 2022. Indian manufacturing is promoted through import barriers and incentives, but some Indian manufacturers are expanding without incentives. Indian manufacturers are reportedly considering U.S. module plants to benefit from IRA incentives. Sources: BNEF, 1H 2023 India Renewables Market Outlook, 2/28/23; BNEF, 1Q 2023 Global PV Market Outlook, 2/28/23; Goldman Sachs Equity Research, America's Clean Technology: Solar, 2023 Outlook, 12/18/22; JMK Research and Institute for Energy Economics & Financial Analysis, India's Photovoltaic Manufacturing Capacity Set to Surge, Mercom (3/10/23, 3/14/23); Mercom India Research, State of Solar PV Manufacturing in India, 3/23. NREL 12#13. • Japanese Market Update Japan installed 6.5 GWdc of PV in 2022, about the same as in 2021 as part of a mostly declining trend since the high in 2015. Cumulative capacity at the end of 2022 was about 85 GWdc. Japan's PV Capacity Additions (GWdc) 12 Scarce land and decreasing feed-in tariff rates continue to constrain PV deployment, while goals require at least doubling PV capacity by 2030. Japan is experimenting with requiring PV on new buildings and with deploying agrivoltaics. Government subsidies stimulated an increase in corporate PPAs in 2021 (91 MWdc) and 2022 (228 MWdc), most of which were PV PPAs. Japan's High PV Density Cumulative PV capacity per sq km of total (land + water) country area, 2022 China, 39 450 10 8 6 4 2 Cumulative PV capacity (GWdc) 400 350 300 250 200 USA, 14 150 Japan, 225 India, 24 100 Germany, 188 Australia, 4 Spain, 53 Italy, 83 S Korea, 249 Brazil, 3 50 0 0 2015 2016 2017 2018 2019 2020 2021 2022 1 2 3 4 6 7 8 9 10 5 Top 10 countries for PV installed in 2022 Sources: Bloomberg NEF, 1Q 2023 Global PV Market Outlook; IEA, National Survey Report of PV Power Applications in Japan, 2021; IEA, Snapshot of Global PV Markets: 2023; PV Magazine (3/21/23); U.S. Central Intelligence Agency, World Factbook. NREL 13#14CSP Capacity (GWac) 2.5 Global CSP Capacity 2.0 Operational I Under Construction 1.5 1.0 0.5 0.0 Spain USA China UAE South Africa Morocco India Israel Chile Other Sources: Richard Thonig, Alina Gilmanova & Johan Lilliestam. (2023). CSP.guru 2023-01-01 [Data set]. Zenodo.https://doi.org/10.5281/zenodo.1318151. At the end of 2022, global CSP capacity reached approximately 6.4 GW, with 1.3 GW under construction. - - While no CSP projects were installed in 2022, the Noor facility in UAE added 100 MW of CSP in February 2023. All Chinese CSP projects under construction are co- located with PV. There are an additional 3 GW of CSP projects under development in China, not included in these numbers. NREL 14#15CSP Capacity (GWac) 7 6 ம + 1 0 . Global CSP Capacity Over half of CSP projects in operation have storage, with 36% of the capacity having 6 hours or more of storage. • Projects under construction, on average, have storage, and longer hours of storage, than those currently in operation. Hours of Storage 10+ hrs. 6-10 hrs. 2-6 hrs. <2 hrs. No Storage CSP Capacity (GWac) N 3 LO St 6 Operational Under Construction Sources: Richard Thonig, Alina Gilmanova & Johan Lilliestam. (2023). CSP.guru 2023-01-01 [Data set]. Zenodo.https://doi.org/10.5281/zenodo.1318151. 1 73% of current CSP capacity uses parabolic trough technology, compared to 51% of those under construction. Technology Fresnel Tower Trough Operational Under Construction NREL | 15#16Capacity Factor 35% 30% 25% 20% 15% 10% 5% 0% 2014 Source: EIA, Form 923. U.S. CSP Project Generation Performance, 2014-2022 2015 2016 2017 2018 2019 2020 2021 2022 SEGS III-IX (Trough) Nevada Solar One (Trough) Genesis (Trough) Solana (Trough+6 hours storage) Mojave (Trough) -Tonopah (Tower+10 hours storage) -Ivanpah (Tower) While it took a few years to optimize the operation of the five U.S. CSP plants brought online from 2013-2015, four of them now generally perform better than when they began operation. - Annual weather variation also caused some of the differences in annual production. - Tonopah continues to have, however produced power for seven months of the year in 2022 - the most since 2018. In September and October it reported an average capacity factor of 29%. Absolute capacity factor is not necessarily the best metric for performance as plants can be designed and operated differently. NREL 16#17Agenda 1 Global Solar Deployment 2 U.S. PV Deployment 3 PV System Pricing 4 Global Manufacturing 5 Component Pricing 6 Market Activity 7 U.S. PV Imports • In 2022, PV represented approximately 46% of new U.S. • electric generation capacity, compared to 4% in 2010. - Nearly 30 GWac of new installed capacity was either from renewable energy or battery technologies in 2022, a decline of 7 GWac compared to 2021. Solar still represented only 9.0% of net summer capacity and 4.7% of annual generation in 2022. - However, 16 states generated more than 5% of their electricity from solar, with California leading the way at 27.3%. • The United States installed 17.0 GWac (20.2 GWdc) of PV in 2022, ending the year with 110.1 GWac (140.6 GWdc) of cumulative PV installations. • The United States installed approximately 14.1 GWh, 4.8 GWac of energy storage onto the electric grid in 2022, up 34% y/y. NREL 17#18Recent Solar News (Congressional) Repeal of the AD/CVD waiver/"bridge" - On April 1, 2022, at the request of Auxin Solar, Commerce initiated country-wide circumvention inquiries on whether imports of c-Si PV cells and modules from Cambodia, Malaysia, Thailand, or Vietnam using parts and components from China are circumventing AD and CVD orders. On June 6, 2022, President Biden declared an emergency and authorized the temporary extension of time and duty (and deposit)-free importation of solar cells and modules from Southeast Asia for up to 24 months, over concerns the lack of panel supply would cause electric grid reliability issues. In December 2022, the U.S. Department of Commerce issued a preliminary decision to impose anti-circumvention duties on some solar panels and cells produced in Vietnam, Malaysia, Thailand, and Cambodia. A final determination was set to be due May 1, 2023, but has been extended to August 17th, 2023. In January 2023, a bipartisan group of lawmakers objected to the two-year waiver under the Congressional Review Act (CRA), which allows Congress to repeal executive decisions if a simple majority is reached and passed within 60 days. On April 18, 2023, a group of over 400 U.S. solar companies led by the Solar Energy Industries Association (SEIA) petitioned Congress to uphold the waiver. SEIA stated that if the CRA legislation passes, it will eliminate 30,000 U.S. solar jobs, including 4,000 in the manufacturing sector, cost U.S. solar companies over $1B in retroactive duties, and lead to the cancellation of 4 GW in planned projects. On April 28, 2023, the House passed the CRA (221-202) and the Senate passed it on May 3rd (56-41). On April 24, the WH promised to veto the legislation. House debt ceiling bill: - - Repeals the ITC/PTC extension (including the domestic content, energy community, and low-income bonuses, as well as the labor requirements), and the 25D extension (including revoking the battery storage tax credit) Repeals the 48C increase (including the energy community and labor requirements) and repeals the MPTC Repeals the elective payment and transferability options Ultimately repeals or revisits 24 different tax incentives from IRA. NREL 18 Sources: past 2022 Quarterly Solar Industry Updates, PV Tech in January and in April (18 and 19), WH press release, H.R. Limit, Save, Grow Act of 2023#19Recent Solar News • On April 4, 2023, the White House released a Guidebook intended to help Tribal and indigenous communities navigate IRA opportunities. The Guidebook provides descriptions and eligibility information for Tribes to benefit from IRA grant, loan, and clean energy incentives. It also provides a brief summary of each program, key dates to watch out for, and important links for further information. On April 19, 2023, the EPA released its framework for the Greenhouse Gas Reduction Fund (GGRF), a $27B fund for clean energy projects targeting low- income and disadvantaged communities. The framework outlines three grant competitions: the National Clean Investment Fund ($14B), the Clean Communities Investment Accelerator ($6B), and the Solar for All competition ($7B), which will provide 60 grants to States, Tribal governments, municipalities, and nonprofits. The EPA invites feedback by May 12th on this framework, and also plans to hold six public listening sessions. Sunnova VPP loan guarantee The U.S. Department of Energy Loan Program Office (LPO) announced a conditional commitment of up to $3B in a partial loan guarantee (i.e., a 90% guarantee of up to $3.3B) to Sunnova to support its Project Hestia. Certain conditions must still be satisfied before the DOE loan guarantee is issued, including finalization of definitive financing documents. Sunnova's Project Hestia offers disadvantage individuals and communities better access to loans for solar installations, battery systems, or other Sunnova Adaptive Home™ technologies. To be eligible, the energy system must be outfitted with Sunnova's VPP-enabling software, which is designed to improve customer insights regarding their power usage and to facilitate demand response behavior. The project is expected to provide loans for ~75,000-115,000 homeowners throughout the United States, with Sunnova targeting 20% of their loans to homeowners in Puerto Rico and at least 20% to customers with FICO credit scores of 680 or less. The ~568 MW, 25-year project is also estimated to created 3,400 job. Sunnova has agreed to: provide monthly servicing reports supplemented by hardware and software deployment information to DOE, measure the reduction in greenhouse gases associated with Project Hestia, and deliver collateral pools that realize agreed criteria related to FICO distributions and certain concentrations of customers located in disadvantaged communities. Sources: iratracker.org, WH press release, EPA press release, Solar Power World, LPO press release, Sunnova press release NREL 19#20States: Q1 2023 Updates A New York State Public Service Commission authorization provides $4.4 billion to fund 62 local transmission upgrades, which will enable 3.5 GW of renewable energy capacity. The upgrades are expected in the 2024-2030 timeframe. A Minnesota law requires electric utilities to reach 100% carbon-free power by 2040. North Dakota, an exporter of coal-generated power, is considering suing Minnesota under the Constitution's Dormant Commerce Clause. A California Public Utilities Commission (CPUC) order requires 4 GW of zero- carbon capacity by 2027, to support grid reliability and decarbonization, in addition to 11.5 GW ordered in 2021. CPUC also approved an integrated resource plan targeting 86 GW of new resources-mostly solar and batteries-by 2035. Texas' Aggregated Distributed Energy Resources Pilot Program is enabling controllable energy equipment (such as PV + storage) on homes and businesses to act as virtual power plants. Three executive orders accelerate New Jersey's 100% zero-carbon electricity target by 15 years, to 2035. Legislation is required to implement the orders. A bill revising the state's renewable portfolio standard was introduced in 2022. A controversial Illinois law prevents local governments from limiting or banning solar and wind in support of the state's 2021 law targeting carbon-free power by 2045. California and New York have taken similar actions. A utilities commission ruling in North Carolina adds rooftop PV minimum bills, introduces time-of-use rates, and incentivizes PV-plus-storage systems. Source: Canary Media (1/27/23), Canary Media (2/24/23, 3/27/23), CPUC (2/23/23), Grist (9/15/21), Grist (3/2/23), Inside Climate News (2/27/23), New Jersey Legislature (8/8/22), Office of Governor Tim Walz (2/7/23), Politico (1/30/23), PV Magazine (2/15/23), PV Tech (2/20/23), RMI (3/6/23), State of New Jersey (2/15/23), Utility Dive (2/7/23) NREL | 20#21States: 2022 Year-in-Review Top Solar Policy Trends of 2022 • Less use of traditional net Number of solar policy and rate design actions in 2022 No. of policy actions - DG compensation 100 80 60 40 20 • • metering More use of net billing and time-varying compensation More consideration of grid- access fees and minimum bills (with mixed results) 0 Incorporation of PV provisions 100 specific to low- and medium- income households Consideration of community . solar programs . Promotion of PV + battery 2015 2016 2017 2018 2019 2020 2021 2022 No. of policy actions - community solar 80 60 40 20 0 2015 2016 2017 2018 2019 2020 2021 2022 systems • Linking of labor requirements with PV programs • Increased complexity of PV programs Use of iterative approaches to PV program design. No action in 2022 1-2 actions in 2022 3-5 actions in 2022 6-9 actions in 2022 10 or more actions in 2022 NREL 21 Source: North Carolina Clean Energy Technology Center, The 50 States of Solar: 2022 Policy Review and Q4 2022 Quarterly Report, January 2023. Map reproduced with permission.#22New Guidance on the Energy Communities Bonus Energy Communities Bonus Credit Program: a 10% increase to the Investment or Production Tax Credits (ITC/PTC) to brownfields, fossil fuel communities with high unemployment, and coal closure communities. Treasury released guidance on April 4th, including releasing a map hosted by the Interagency Working Group on Coal & Power Plant Communities & Economic Revitalization, DOE and IRS. Seattle Washington Maran Oregon Sacramento San Francisco Fresno Californ Great Besin Los Angeles San Diego Rocky Mounta Salt Lake is Vegas Colorado Pistons Arizona Phoenix Tucson Hermosillo Sierra Madre Occident Dakota Minnesota. South Dakota Minneapolis ° Wisconsin Great Plains T Iowa Nebraska Denver UNITED STATES Colorado Mexico Lake Superior Lake Haron Milwaukee Detroit Chicago Cleveland - Col hois Indianapolis o Kansas City Cincinnati St Lou Louisvill Kansas Kentucky Nashvi Oklahoma Oklahoma City Arkansas Memphis El Paso Texas Chihuahua Torreón Dallas Missouri Appalecan b Toronto Buffalo Quebec N Brun Ottawa o Montreal Maine Appalachian Mountains New York Philadelphia Washington Richmond Virginia o Norfolk Charlotte Atlanta South Carolina Mississi Alauama Georgia Louisiana Florida New Orleans Houston San Antonio o Monterrey Gulf of Mexico Coastal Plain Jacksonville Tampa Miami Providence Coal Closure Community Adjacent to a Coal Closure Community Metropolitan or Non-Metropolitan Statistics Areas that meet the Fossil Fuel Employment Threshold *Unemployment rates from 2022 are not yet available, so the areas are not yet confirmed as energy communities.* Not depicted: Brownfields Fossil fuel communities as determined based on tax revenue.#23New Guidance on the Energy Communities Bonus Brownfield Category: Treasury clarified that any federal, state, territory, or federally recognized Indian tribal assessment process is sufficient to qualify, or the completion of an ASTM E1903 Phase II Environmental Site Assessment (Phase I for < 5 MW ac sites) to confirm the presence of hazards and/or pollutants. Statistical Area Category (a.k.a. Fossil Fuel Communities w/High Unemployment): Treasury clarified how metropolitan and non-metropolitan statistical areas were defined, how fossil fuel employment was defined, and how unemployment rates are calculated (and how those rates will be updated annually each May). Treasury has invited public comments by May 4th addressing possible data sources, revenue categories, and procedures for determining eligibility based on Fossil Fuel Tax Revenue (instead of Fossil Fuel Employment). Coal Closure Category: Treasury clarified that census tracts are defined via the 2020 census, how a coal mine is deemed abandoned, how a coal-fired electric generating unit is deemed retired, and that "directly adjoining" is defined as a single point of contact. Timing: For the PTC: the facility can located within an energy community for any part of the taxable year. For the ITC: the facility must be within an energy community when it is placed in service. Grandfather clause: If a facility begins construction within an energy community, the location can continue to be considered an energy community for the duration (for ITC or PTC). Location: ≥50% of a facility's nameplate capacity (dc for solar, MWh for storage, ac otherwise) must be within the boundaries of an energy community. Offshore projects can attribute their capacity to their land-based transmission/distribution equipment that is closest to the point of interconnection.#24International Versions of IRA Canada via Budget 2023 • . • Clean Electricity Investment Tax Credit: 15% refundable tax credit for eligible investments in non-emitting electricity generation (wind, solar, hydro, nuclear, abated natural gas), storage, and transmission equipment, lasts from 2024-2034, and includes labor incentives. Investment Tax Credit for Clean Technology Manufacturing: 30% refundable tax credit on the cost of investments in new machinery and equipment used to manufacture or process clean technologies, or extract/process/recycle critical minerals. "Canada must either meet this historic moment - this remarkable opportunity before us - or we will be left behind." • These two tax credits are estimated to cost $25.7B + $11.1B = $36.8B CAD. Australia via the National Reconstruction Fund • $15B AUD fund to invest in 7 "priority areas" for the Australian economy: • Renewables and low-emission technologies were one category, as was mining and raw material processing. $3B AUD was allocated for investing in: green metals; clean energy component manufacturing; hydrogen electrolyzers and fuel switching; and agricultural methane reduction and waste reduction. $1B AUD was allocated for investment in advanced manufacturing. One of "the largest peacetime investments in Australian manufacturing capability." Source: Chapter 3: A Made-In-Canada Plan: Affordable Energy, Good Jobs, and a Growing Clean Economy | Budget 2023, National Reconstruction Fund | Policies | Australian Labor Party (alp.org.au), Australia's Response To Inflation Reduction Act | TaiyangNews#25New Guidance on the Low-Income Communities Bonus Low-Income Communities Bonus Credit Program (48(e)), awards an upfront 10% or 20% bonus tax credit for a maximum of 1.8 GWdc per year of solar projects ≤ 5 MW ac in size. Treasury announced in February how the credits would be allocated in 2023: 700 MW 200 MW 1 2 10% credit low-income community as defined by the New Markets Tax Credit Indian Land Applications after Q3 2023 3 4 qualified low- 20% credit qualified low-income economic benefit project income residential building Applications in Q3 2023 Treasury and the IRS can reallocate excess capacity to any oversubscribed categories, with any unallocated capacity rolling over. Only the owner of the project can apply; projects cannot apply to more than one category; and projects placed in service prior to receiving an awarded an allocation are not eligible. Treasury is still developing additional selection criteria, which may include 1) ownership by community-based organizations and mission- driven entities; 2) encourages new market participants; 3) provide substantial benefits to low-income communities and individuals marginalized from economic opportunities; and 4) have a high degree of commercial readiness. Most of the guidance only applies to 2023 allocations and further guidance is still required in many key areas (to be provided later).#26New Guidance Issued on 48C On February 13, as mandated by law, the IRS issued guidance on the two Treasury tax credit programs with an allocation process. • • Advanced Energy Project Credit (48C ITC), administered by DOE's MESC, awards an upfront 30% tax credit (if labor requirements are met) for capital investments made to purchase and commission an industrial or manufacturing facility. - 48C was originally established under the 2009 ARRA with $2.3B in funding and with a scope only covering green manufacturing. IRA reestablished the program, expanding eligibility to include industrial facilities, and authorizing $10B in allocated tax credits, with $4B of the allocations going to projects in "energy communities" and that have not been allocated a credit before. Notable 48C guidance issues on February 13th - Selection will follow the standard DOE two-step FOA process of concept papers which received encourage/discourage letters, followed by review of a full application. The program will begin accepting concept papers on May 31, 2023, for a first round of $4 billion in credits, with approximately $1.6 billion reserved for projects in energy communities. Concept papers will be due no later than July 31, 2023. The IRS will provide additional guidance May 31, 2023 on the technical review criteria that will be used to evaluate proposals. The IRS anticipates the criteria will include net impact on greenhouse gas reduction; community benefits of the project (community and labor engagement, as well as high quality, accessible jobs, and workforce pathways); the extent to which the proposed project addresses specific gaps, vulnerabilities, or risks to domestic clean energy production (including the risk associated with foreign involvement); and others. Appendix A of the Notice provides further guidance by giving examples of property, product, and technology that are eligible and ineligible. Solar property is defined quite broadly.#27Annual Generation (TWh) 1,800 1,600 1,400 1,200 1,000 800 600 12% 400 200 U.S. Generation, 2012-2022 Coal Natural gas Nuclear Renewables 23% Hydro Wind Geothermal Other 10% 9% Solar 5% • The United States generated 4,300 terawatt-hours (or 4.3 petawatt-hours) of electric power last year. Energy generation from renewables continued its steady upward trend, as a result of increases in both wind and solar generation. - Solar and wind generation combined accounted for 15% of electric generation in 2022, up from 13% in 2021. The percentage of electricity generated by fossil fuels in the United States dropped from 69% in 2012 to 60% in 2022, while the percentage of electricity generated by renewable generation increased from 12% to 23% over the same period. In 2022, renewable energy facilities continued to produce more electricity than both nuclear and coal sources. EIA attributed the decrease in coal-fired generation to several plants retiring and the remaining plants being less used. The decrease in nuclear generation was similarly the result of the Palisades nuclear power plant retiring. 0 4% 2012 2014 2016 2018 2020 2022 Sources: U.S. Energy Information Administration (EIA), "Electricity Data Browser." Accessed April 10, 2023; and a Today In Energy article (March 27, 2023). NREL 27#28. 2022 U.S. Generation and Capacity Renewables are becoming an increasingly large part of the U.S. electric generation mix, representing 28% of capacity and 23% of generation in 2022. - Adding nuclear, non-carbon sources represented 36% of capacity and 41% of generation. 2022 U.S. Generation (Total 4,302 TWh) • • Solar still represents a small but growing percentage of the U.S. electric generation mix. - In 2021, solar represented 9.0% of net summer capacity and 4.7% of annual generation. Capacity is not proportional to generation, as certain technologies (e.g., natural gas) have lower capacity factors than others (e.g., nuclear). 2022 U.S. Generation Capacity (Total 1.2 TW) Geothermal. Coal Other 2.2% 19% Natural gas 39% 0.4% CSP 0.1% DPV Wind 10% Nuclear 18% 1.4% UPV Hydro 3.3% 6% Coal 17% Natural gas 41% Other 6% Geothermal. Nuclear 0.2% CSP Wind 8% DPV Hydro 0.1% 12% 7% 3.3% UPV_ 5.9% Sources: EIA, "Electric Power Monthly" Tables 6.1, 6.1A, February 2023, "Electricity Data Browser," April 10, 2023. NREL | 28#29U.S. Electric Capacity Additions (GWdc) New U.S. Capacity Additions, 2012-2022 ■Natural gas Other Nuclear Wind Batteries CSP DPV UPV 45 40 35 30 212242 25 20 15 10 5 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 . In 2022, PV represented approximately 46% of new U.S. electric generation capacity (29% UPV, 17% DPV), compared to 15% in 2012. - Wind represented 24% of added capacity and batteries an additional 11%, for a total of 81% of capacity additions from those three technologies. Nearly 30 GWac of new installed capacity was either from renewable energy or battery technologies in 2022, a decline of 7 GWa compared to 2021. ас Both solar and wind installations declined in 2022, although solar installations still nearly doubled that of wind. Only battery installations grew from 3.3 to 4.1 GW in 2022. ас Note: "Other" includes coal, geothermal, landfill gas, biomass and petroleum. Sources: EIA, "Electric Power Monthly" Tables 6.1, 6.2B, 1.1, 1.1A; Forms 860M & 861M. April 2023. Today in Energy. NREL 29#30U.S. Generation Capacity Additions by Source: 2010-2022 and Planned 2023-2024 80 60 70 0 60 60 50 U.S. Generation Capacity Additions (GWac) UN 50 40 30 20 10 0 Avg. (2010-2014) Avg. (2015-2019) 2020 2021 2022 2023 2024 68% Other Nuclear ■Natural Gas (Other) Natural Gas CT Natural Gas CC Batteries ■Wind DPV UPV Began operating through March 2022 Planned April 2023 and full 2024 • EIA projects the percentage of U.S. electric capacity additions from solar will grow from 46% in 2022 (17 GWac) to 58% in 2023 (37 GWac), and 68% (47 GWac) in 2024. Wind accounts for 12% and batteries 14%, and nuclear 2% of estimated capacity in 2023; in 2024 those percentages are 9%, 19%, and 2%, respectively. Natural gas accounts for the remaining 13% in 2023. Over the next two years, EIA projects there will be nearly 100 GWac of capacity additions from wind and solar alone. Wood Mackenzie/SEIA projects 26-30 GW dc of solar installations in 2023 and 30-36 GWdc in 2024, depending both on favorable supply chain conditions (both domestic and international) as well as the ability to optimize the Inflation Reduction Act bonus credits. - Over the next five years, Wood Mackenzie/SEIA projects about 20 GWdc upside or downside relative to their base case as a result of these factors. Sources: EIA Form 860M/Preliminary Monthly Electric Generator Inventory ("Planned" and "Operating") and EIA Short-term Energy Outlook Table 7e, downloaded April 25, 2023; Wood Mackenzie and SEIA US Solar Market Insight Full Report 2022 Year in Review, Mar 2023. NREL 30#31Generation (TWh) Capacity (GW) NREL Report on Projected BIL + IRA Impacts Using ReEDS (the Regional Energy Deployment System), a team at NREL looked at the impact of IRA + BIL on the contiguous U.S. power sector from 2023 to 2030. They found: 1500 1000 500 0 44 4K 2K OK No New Policy Mid IRA-BIL Constrain. Mid Constrain. 2022 2026 2030 2022 2026 2030 2022 2026 2030 Diff. in Generation (TWh) Diff. in Capacity (GW) 400 200 0 1K HI OK -1K IRA-BIL Technology Type Mid Constrain. Imports Battery PHES 2022 2026 2030 2022 2026 2030 Solar Wind-Offshore Wind-Onshore Geo Hydro Bio & LFG OGS Gas-CT Gas-CC-CCS Gas-CC Coal-CCS Coal Nuclear . Clean electricity could grow from 41% of total generation in 2022, to 71-90% by 2030. Without IRA+BIL, clean electricity would only account for 46-52% of the grid. This is mainly the result of increased production from wind and solar, supplemented by battery storage and long-distance transmission. Annual power sector CO2 emissions could decline by 72-91% below 2005 levels by 2030. Estimated avoided climate damages range from $160B to $230B. IRA+BIL are estimated to lead to a net decrease in power system costs of $8B-$25B annually by 2030 or $50B-115B from 2023 to 2030. Annual average deployment rates for wind and solar combined range from 44 GW/yr-93 GW/yr. Source: Evaluating Impacts of the Inflation Reduction Act and Bipartisan Infrastructure Law on the U.S. Power System (nrel.gov)#32U.S. Installation Breakdown Annual: EIA (GWac) • The United States installed 17.0 GWac of PV in 2022-down 12% y/y. Residential (5.2 GWac), was up 30%, however C&I (1.3 GWac), and utility-scale PV (10.6 GWac) were down 19% and 23%, respectively, in 2022. U.S. PV Installations by Market Segment . Approximately 52% of U.S. PV capacity installed in 2022 was in Texas, Florida, and California. Despite a concentration of PV installations in the top three markets, diversification of growth continues across the United States. - 20 states had more than 1 GWac of cumulative PV installations at the end of 2022 (Oregon achieved this distinction for the first time in 2022), and 29 states installed more than 100 MWac in 2022. PV Installed (GWac) 5 10 15 45 25 20 20 0 5.7 11.3 9.3 8.4 8.3 19.3 17.0 15.0 2022 U.S. PV Installations by Region (17.0 GWac) Southwest 9% Texas 18% Florida 10% California 24% Other 2015 2016 2017 2018 2019 2020 2021 2022 4% Northeast 11% Midwest ■Residential PV ■Non-Residential PV Utility PV Southeast 10% 14% Note: EIA reports values in Wac which is standard for utilities. The solar industry has traditionally reported in Wdc. Sources: EIA, "Electric Power Monthly," forms EIA-023, EIA-826, and EIA-861 (March 2023, April 2022, February 2021, February 2019). NREL 32#3315 Annual PV Installed (GWdc) 0 5 30 25 • U.S. Installation Breakdown Annual: SEIA (GWdc) SEIA reports that the United States installed 20.2 GWdc of PV in 2022 (140.6 cumulative)—an annual decrease of 16% y/y. 11.8 GWdc UPV (-31% y/y), 2.4 GWdc Non-residential (-10% y/y), and 5.9 GWdc Residential (40% y/y). Q4 2022 installations totaled 6.6 GWdc. U.S. PV Installations by Market Segment • Unlike the previous slide, these values are in GWdc-not GWac. In 2022, 50% of installed capacity occurred in California, Texas, and Florida, however 28 states installed more than 100 MW. 2022 U.S. PV Installations by Region (20.2 GWdc) 2010 2011 2012 Utility Nonresidential PV ■Residential PV 2013 2014 2015 2016 Sources: Wood Mackenzie/SEIA: U.S. Solar Market Insight: 2022 YIR. 2017 2018 2019 2020 2021 2022 California 24% Texas 17% Other 6% Southwest 10% Midwest Florida 9% 8% Southeast 15% Northeast 11% NREL 33