Oct 15, 2014 - The market for engineering, procurement and construction (EPC) services for utility-scale solar and wind in the US is projected to reach a peak of USD 7.2 billion (EUR 5.7bn) in 2015 and decline after that, a new report shows.
In 2016 the market will fall by 28% to USD 5.2 billion and then lose a further 52% to USD 2.5 billion in 2017. The reason for the forecast drop is the expiry or cuts to certain federal tax incentives during the period 2015-2017, Bloomberg New Energy Finance (BNEF) said yesterday.
A portion of the wind power-focused EPC service firms in the US are more and more engaging themselves in the solar sector to benefit from the more stable policy environment there. BNEF explained further that working on smaller utility-scale solar projects, of between 1 MW and 10 MW, in states with solid incentives could fetch higher margins for EPC service providers than what can be gained from large-scale wind
In order to adapt to the economic realities of a changing industry, EPCs with expertise in the renewables field are now participating in the project permitting process as well as in securing the point of interconnection. Some of them are even offering financing or alternative payment methods to customers. Also, part of the EPC firms are now turning to adjacent technologies like advanced storage, the report points out.
In the meantime, EPC costs have been declining alongside total project expenses due to the increased scale and maturity of the US solar and wind sectors. EPC prices for photovoltaic (PV) installations are estimated at between USD 1.38 per watt for very large desert-based schemes using thin-film modules, and USD 1.97/W for schemes of around 5 MW in size in the state of New Jersey, for example. When it comes to wind, EPC costs are range between USD 0.41/W in Oklahoma and USD 0.62/W in New England.
“On the solar side, downward pressure on margins will likely continue as developers look to EPCs to absorb expected price increases caused by tariffs in Chinese panels. On the wind side, competition with the gas industry for labor and basic commodities will add additional stress,” said Jacqueline Lilinshtein, clean energy economics analyst at BNEF.
The report also ranks EPC firms in terms of the quantity of wind and solar capacity they have brought online. Among the solar-focused companies, SunPower Corp (NASDAQ:SPWR) comes first, followed by First Solar Inc (NASDAQ:FSLR). As per wind, the list is topped by Mortenson, followed by IEA and RES Americas.
BNEF's report, named The Evolving Landscape for EPCs in US Renewables, was commissioned by local consultancy CohnReznick.
(USD 1.0 = EUR 0.791)
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Solar panels. Author: Oregon Department of Transportation. License: Creative Commons, Attribution 2.0 Generic
