Price Collapse Will Help US Solar Market Double in 2011

Despite a struggling economy, the US solar photovoltaic (PV) market will double in 2011, according to the latest Solarbuzz report.

"With rapid declines in factory gate prices over the past eight weeks as manufacturers and distributors focus on depleting module inventories, demand has picked up across residential, corporate and government segments," notes Craig Stevens, President of Solarbuzz. "This acceleration is being supplemented by explosive utility demand and the rush to install before federal cash grants are scheduled to expire at the end of the year."

The US is forecast to become the third largest solar PV market, behind Germany and Italy in 2011. While the US currently comprises just 5% of the world PV market, Solarbuzz expects that to rise to 12% by 2015.

Policies and Incentives Boost US PV Growth

Growth of the US solar industry is supported by a combination of incentives and policies at the federal, state and local levels.

At the federal level, the Investment Tax Credit (ITC) and the Treasury Cash Grants continue to play an important role in stimulating investments in the PV industry. 

At the state level, among various policies, Renewable Portfolio Standards (RPS) are driving adoption by utilities, which increased from 17% in 2009 to 31% in 2010.

In 2010, California dominated the US PV market, but its share dropped from 50% to 30% in 2009. The state recently increased its RPS to 33%, positioning it for continued dominance.

Following California are New Jersey, Arizona and Colorado as the leading US PV markets.

Most of the top 10 states have incorporated drivers such as strong state RPS and incentives, including rebates and  financing. 

For example, New Jersey has been the fastest growing market and one of the largest in terms of installations and installed capacity because of its Solar Financing Model – it relies on high renewable energy standards and the use of Solar Renewable Energy Certificates (SRECs).

China-based solar manufacturers grew their share of the market from 11% in 2009 to 37% in 2010, representing a major shift in market share.  

US Utility Market Segment Doubles Growth

Utility demand for solar is expected to rise, accounting for close to 60% of the market by 2015, in Solarbuzz’s most aggressive forecast scenario.

That demand is driven by state RPS, where utilities are required to source a specific percentage of their electricity from renewables by a specific date.

Instead of just two or three utilities installing over 10 MW in a given year – a typical pattern in recent years – there were 30 such projects in 2010 that either started or completed construction.

US Market: 6.4 GW by 2015

Over the next five years, the US will grow to 6.4 gigawatts (GW), representing a compound annual growth rate of 47%, says Solarbuzz.

The extension of the Treasury Cash Grant beyond the end of 2011 will be critical to keep stoking demand in non-residential and utility segments. Without the extension, less capital will be available for large PV projects.