The expanding U.S. and Canadian photovoltaic generation fleet experienced solar radiation largely in line with the 20-year norm in the third quarter of 2022. Drilling into the data, however, reveals arguably counterintuitive geographical deviations, with typically highly insolated southwestern U.S. states, including solar capacity leader California, in negative territory, portending potential third-quarter earnings pressure for companies with solar portfolios concentrated in the area.
Combined, the U.S. and Canada experienced relatively flat weighted average solar deviations in the third quarter, with gains along the Atlantic façade offsetting subpar radiation across the southwestern U.S., including California.
With relatively high exposure to geographies in negative territory, most of the top 10 owners of U.S. and Canadian utility-scale photovoltaic capacity saw portfolio-wide radiation deviate negatively, compounding the effect of slower wind speeds on overall renewable generation during the period — a development that could weigh on third-quarter earnings.
Across operating U.S. and Canadian solar projects, the weighted average solar radiation came in 0.6% above the norm in the three months ended Sept. 30, 2022. Thirty U.S. states and territories and three Canadian provinces experienced positive deviations, with solar capacity laggards Oklahoma in the U.S. and Saskatchewan in Canada leading the pack, up 4.7% and 4.5%, respectively. The U.S. East Coast stood out, with all states along the Atlantic façade, save for Maine and South Carolina, logging solar radiation above the norm. For perspective, South Carolina operates 1.1 GW of utility-scale solar capacity, and Maine only 282 MW.
In Texas, where a 12.3% sequential jump in operating utility-scale photovoltaic contributed to a more than 47% year-over-year expansion of the state's solar project portfolio, solar radiation deviated 2.1% from the 20-year average, benefiting owners of utility-scale solar capacity with an outsized footprint in the Lone Star state, notably Enel SpA and Copenhagen Infrastructure Partners Inc. Enel SpA, owner of the 400-MW Roadrunner Solar Plant (Queen Solar), one of the largest solar developments in the U.S., holds more than 80% of its U.S. solar portfolio in Texas; for Copenhagen Infrastructure Partners, that value is nearly 88%. Copenhagen's Texas-based 351-MW Fighting Jays Solar Project alone accounts for more than 42% of the company's U.S. photovoltaic assets.
California, which boasts the largest utility-scale solar generation fleet at 16.5 GW, or more than 23% of the nation's total, saw solar radiation drop 2.8% below the norm during the period under consideration. Fellow southwestern U.S. states Arizona, Nevada and Utah were also in the red. Only South Carolina experienced a greater negative solar radiation deviation than the southwestern states listed above. Lower-than-normal radiation across Arizona, California, Nevada and Utah affected solar operators heavily implemented in the region, including NextEra Energy Inc., exposed to the tune of 27.2%.
The company's cluster of nine solar projects totaling 1.4 GW in Southern California's Riverside County, east of Orange County, experienced solar radiation markedly below the 20-year average during the period, with deviations ranging from a negative 4% to a negative 4.6%. The cluster, which includes the 270.6-MW McCoy Solar Energy Project, the 250-MW Genesis Solar Energy Project and the plants making up the 515.2-MW NextEra Blythe Solar Energy Center LLC, accounts for more than 90% of NextEra's California solar generation fleet.
Florida's 1.5% positive deviation from the norm helped offset NextEra's suboptimal California solar radiation. The Sunshine State is home to more than 43% of NextEra's overall U.S. solar capacity. Most of the company's Florida solar projects benefited from extra radiation during the three-month period under review, with only NextEra's Cotton Creek Solar Energy Center, Gulf Power Blue Indigo Energy and Blue Springs Solar Energy Center in the Florida panhandle noticeably in the red, with deviations ranging from a negative 1.1% to a negative 5%.
Only three of the top 10 owners of utility-scale solar capacity in the U.S. and Canada experienced positive solar radiation from the norm in the third quarter. Dominion Energy Inc. tops the charts, up a company average 2.6%. With approximately 60% of its photovoltaic portfolio in Virginia, the company benefited from a nearly 4% jump in radiation in the Old Dominion state. Recorded radiation at three Virginia-based 100-MW-plus Dominion solar projects deviated at a greater magnitude than at the state level. Fort Powhatan Solar Project, Colonial Trail West Solar Facility (US-3 Solar Project) and Southampton Solar (Amazon Solar Farm US East 6) all logged deviations close to 5%.
Extra radiation shone on most midsize owners, or companies holding between 780 MW and 1.4 GW of solar capacity. With three Texas-based projects making up 58% of the company's solar generation fleet logged mid-single-digit deviations, Lightsource BP Renewable Energy Investments Ltd. experienced the largest positive portfolio deviation across this segment. Lightsource's 134.7-MW Elm Branch Solar Project, located between Dallas and Waco, notably experienced 5% radiation upside. ENGIE SA is a close second at 2.3%. Enel SpA rounds out the top three.
MN8 Energy Inc., formerly Goldman Sachs Renewable Power LLC, brings up the rear, down 1.8%. MN8 Energy on Aug. 22, 2022, announced the acquisition of 14 New Energy Solar Ltd. solar energy facilities totaling 387 MW of operating capacity in a $244.5 million deal. Combined with MN8 Energy's current photovoltaic capacity, the transaction would bring the company's solar portfolio to 1.4 GW.
Solar radiation is the mean surface downward short-wave radiation flux measured from the fifth-generation European Centre for Medium-Range Weather Forecasts reanalysis. This variable includes direct and diffuse solar radiation and is the model equivalent of global horizontal irradiance, the value measured by a pyranometer, a solar radiation measuring instrument. The data is available at quarter-degree latitudes and longitudes, a spacing of slightly over 27.5 km. This analysis compares third-quarter radiation values with the 20-year solar radiation average for the corresponding period.
Regulatory Research Associates is a group within S&P Global Commodity Insights.
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Kristin Larson, Dred Semodio and Chris Allen Villanueva contributed to this article.
This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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