Based on reports of exponential growth from Q1 2010 to Q1 2011, the U.S. solar industry’s future seems as bright as the sun that fuels it.
According to the U.S. Solar Market Insight™: Q1 2011 released in mid June by the Solar Energy Industries Association® (SEIA®) and GTM Research, the U.S. installed 252 megawatts (MW) of grid-connected photovoltaics (PV) in Q1 2011 alone. This marks a 66 percent increase from Q1 2010 to Q1 2011.
The SEIA® reports the United States’ cumulative grid-connected PV installations have reached more than 2.85 gigawatts (GW), enough to power nearly 600,000 U.S. homes. And while no concentrating solar power (CSP) projects came online in Q1 2011, a total of 1.1 GW of CSP and concentrating photovoltaic (a technology in which sunlight is concentrated on PV cells) projects coupled with significant forecasted additional PV growth has the U.S. on pace to become the world’s largest solar market within the next few years.
So in what geographic regions and market sectors is this growth most prevalent? Geographically, the top seven states in Q1 2010 accounted for 82 percent of U.S. installations. While the Top Seven list changed a bit since 2010, the seven top-ranked states of Q1 2011 (California, New Jersey, Arizona, Pennsylvania, Colorado, New York and Massachusetts) made up 88 percent of U.S. installations. In other words, the top-ranked states continue to gain traction and dominate market share. This is partly attributed to state-specific programs that incentivize customers to participate in solar installations. For example, as explained in the U.S. Solar Market Insight™: Q1 2011:
“In California, the CSI’s relatively new solar water heating incentive of up to $1,875 per installation for residential homes and $500,000 per installation for commercial and multi-family structure is helping to drive increased interest in solar water heating that we saw begin in 2010. Arizona’s market also remains quite strong, with most utilities offering production incentives that can cover up to half of a system’s costs. Look for Arizona to be a leading market by the end of 2011.”
From a market sector standpoint, non-residential (commercial, public sector and non-profit) installations ruled with 119 percent growth from Q1 2010 to Q1 2011. Residential installations continued a pattern of marginal yet steady quarter-over-quarter growth.
So to what specific factors are industry analysts attributing U.S. solar power’s strong showing in Q1 2011? The two primary factors identified in the SEIA® report are “market fundamentals” and “2010 overhang.”
Each factor is explained in more detail in the U.S. Solar Market Insight™ Q1 2011, but briefly, “market fundamentals” refers to improvements within the market that have made solar installations more viable for the masses. These improvements include a price decrease on modules, inverters and other components required for solar installation; expansion of new business models like the residential solar lease; and the aforementioned state-sponsored incentive programs.
The “2010 overhang” refers to the completion of installations that commenced in 2010 as part of the Section 1603 Treasury grant originally set to expire on Dec. 31, 2010. Though the deadline was ultimately extended to Dec. 31, 2011, many projects were started in 2010 to meet original grant guidelines, and many of those projects wrapped up in Q1 2011.
What does all this good news mean for the solar industry in the remaining months of 2011? According to the report’s authors, it means the bar has been set very high and the market must continue its rapid acceleration to meet expectations. Says the SEIA® report:
“Despite strong growth in the first quarter, the market will need to ramp up even faster in order to meet industry expectations, which generally anticipate at least another doubling of the total U.S. PV market in 2011. Given the pipeline of projects and recent module price declines, we believe this outcome remains likely.”
It appears that solar power, which has traditionally been a very small part of the overall electric marketplace, may finally be gaining the traction it needs to become a more significant part of our energy mix.
Enerdynamics 