Good Day for Sunshine

David Feldman's picture

2011 is shaping-up to be a good year for the U.S. solar industry.  I recently performed some analysis for the Department of Energy to give them a snapshot of events & trends in the solar industry.  Recently reported data from suppliers, installers and banks that I viewed indicated that not only is the U.S. market growing larger than ever before, it is also expected to grow even more in the future.  I compared 2010 PV installations reported by Greentech Media (GTM) to projected annual PV installations over the next few years in ten reports from leading investment bank analysts.  According to these sources the U.S installed approximately 920 MW of PV capacity In 2010.  The number of installations is expected to grow dramatically as the median projection for annual installations predicted 2 GW of PV to be installed in 2011.  In 2014, the analysts median result for annual installed PV grew to 5.5 GW, which would give the U.S. 22% of worldwide market-share; up from 5% in 2010.

These expectations are in part based on the encouraging results from the first part of 2011.  According to GTM, in Q1 ’11 the U.S. installed over 250 MW of PV as compared to 152 MW in Q1 ’10; an increase of 65%.   Of the 250 MW, 71 MW were installed in the residential space, 148 MW in non-residential, and 33 MW in utility.  Although the utility sector did not install as much PV capacity as it did in Q4 ’10, financing timelines and seasonal considerations can limit the number of installations in the beginning of a year, and there are a large amount of utility scale projects scheduled to be completed this year.  Installations were also concentrated in a few areas of the U.S (see Chart 1).

Chart 1: U.S. PV Installations by State (MWDC), Q1 '11

Chart 1 shows the number of MW installed by State in the first quarter of 2011.  California installed the most, with 112 MW, followed by New Jersey (42 MW).  88% of installations were in seven states (CA, NJ, AZ, PA, CO, NY, MA).

Despite the relatively small amount of utility projects installed in Q1 ’11, this number should increase dramatically in the near future.  According to my estimates there are currently 335 MWDC of PV projects in the U.S. above 5 MWDC in size, however there are 1.3 GWDC currently under construction, and another 1.9 GWDC that have received a conditional commitment from the DOE Loan Program (LPO) or received permission from the Bureau of Land Management (BLM) to begin construction of their project.  What’s more, according to data collected by SEIA as of May 16, 2011, there were over 12 GWDC of announced PV projects under development in the U.S. above 5 MWDC (not including an announced 5 GW project under development in CA).  The same could be said for the growth in CSP projects as well; currently there are 503 MWAC of installed CSP projects, however almost 1.9 GWAC of projects are under construction, another 900 MWAC that have received a conditional commitment from the LPO or a positive record from the BLM, and the Solar Energy Industries Assocation (SEIA) estimates another 8.3GWAC of announced projects under development. 

The growth of the domestic solar market has been tremendous recently; with so many projects currently under construction, and more in the pipeline, this trend should continue into the near future.  The growth for PV has been fueled in part by the reduction in installed system prices.  With the current and expected decline in module prices, as well as the growing maturity of the market which should lower BOS costs, PV systems will most likely continue to fall in price. 

Another strong factor in the growth of the market has been the federal and state incentives; much of the reason installations have been concentrated so heavily in a few states is due to their incentive programs.  With the recent passing into law of the 33% RPS in California, that market should continue to lead the US in solar deployment.  However, the Treasury’s 30% cash-grant program will end this year, as will the DOE’s 1705 Loan Guarantee Program.  There is also regulatory uncertainty in some states (e.g. New Jersey revisiting its Renewable Portfolio Standards) and the eventual ending of the 30% investment tax credit in 2016. 

In the short term the U.S. solar industry is expected to have tremendous growth; the question remains whether the federal and state programs will support the industry until it becomes competitive on an unsubsidized level, and how long that process will take.   For now, everything is trending in the right direction.