Gartner Says U.S. Solar PPA Industry Growth Will Create New IT Revenue Opportunities
Traditional IT Value Chain Vendors Should Act Now to Capitalize on Future Market Growth
STAMFORD, Conn., The U.S. solar power purchase agreement (PPA) market will grow to reach an estimated $8 billion in new photovoltaic (PV) solar power generation installations by 2013, up from an estimated $700,000 in 2009, according to Gartner, Inc. The U.S. solar PPA market is driving new revenue for IT vendors for communications and computing equipment, including data mining and integration software.
Gartner analysts advised software, hardware and IT services firms to develop their go-to-market strategy for the renewable industry by the first quarter of 2010, with a particular focus on the independent power producer (IPP) firms that are developing the U.S. PV systems.
“Many of the traditional IT value chain vendors have yet to focus on this market,” said Al Velosa, research director at Gartner. “If they are able to develop a coherent renewable energy marketing strategy that serves both their customers and a new customer base of more nimble, flexible start-ups with a laser focus on this market segment, then they will reap the rewards.”
The U.S. PV market will be driven by IPP firms using solar PPA contracts. Gartner predicts that the IPP portion of the U.S. PV market will have a compound annual growth rate exceeding 100 percent through 2013 and that in 2013, IPP firms will install PV systems in the U.S. with an energy generation capacity of 2.9 gigawatts, at a cost of $8 billion.
While the market is currently led by young IPP firms, such as SunEdison, Solar Power Partners and Renewable Ventures, traditional IPP firms, such as Sempra Generation, Constellation Energy and NextEra Energy Resources are starting to make their moves into the market.
This move could prove to be well-timed: Gartner believes that an important transition point is set for the U.S. PV market as traditional IPP firms start working with their utility customers on solar PPA contracts. This shift in the center of gravity will move the U.S. PV solar PPA contract market away from its current core in 2009 of commercial and residential end customers, toward a core focused on utility end customers. In particular, the market will have a foundation on substation-scale PV projects — specifically those between 10 megawatts and 30 megawatts.
“This shift in the end markets and the entrance of traditional IPP firms will change the dynamics of the market,” said James Hines, research director at Gartner. “Although existing PPA vendors will continue to play a major role in the industry, the recent spate of contract announcements from both utility and nonutility commercial enterprises with major traditional IPP firms reflects the entry of a new set of players into this market, with a focus on building a volume business for PV systems.”
Smart IT firms will view the opportunity presented by the PPA industry as an opportunity to help themselves on several levels. It will at once allow them to build their renewable energy credentials while also helping to drive the low carbon economy. More importantly, though, it presents a large growth market for IT firms, which should, in turn, develop into a growth market with established clients.
Gartner believes that the biggest requirement in this nascent market will be setting industry standards for everything, including how to collect data, not just as the inverter level but even at the panel level. A first step has been taken by the founding members of SunSpec, which is working to establish data standards to improve interaction and management of PV systems. Next steps will include ensuring data protocols and standards for integrating with the utility firms’ generation planning software tools.
Hardware is another good example of the potential for IT value chain firms to develop solutions for the solar PPA customers of PV systems. Gartner advises semiconductor and communications and computing firms to work with inverter and panel manufacturing firms to integrate their semiconductor and communications solutions into field equipment.
“The successful IT services vendors will be those who adapt their existing market capabilities, particularly from an enterprise resource planning and energy and utilities perspective for this niche market,” concluded Mr. Velosa. “By adding bolt-on solutions and extensions to their work in this space, vendors will lay the foundations for future opportunities.”
Mr. Velosa provides more analysis on the state of the U.S. solar PPA industry on the Gartner YouTube channel at http://www.youtube.com/watch?v=L5n7_QhNMxA. Additional Gartner analyst videos are available at http://www.youtube.com/gartnervideo.
Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the indispensable partner to 60,000 clients in 10,000 distinct organizations. Through the resources of Gartner Research, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries. For more information, visit www.gartner.com.
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