2011 "pivotal" for US as solar identified as fastest growing industry

04. April 2011 | Markets & Trends, Applications & Installations, Industry & Suppliers, Global PV markets | By:  Becky Stuart

A new research report has found that solar is the leading industry in the U.S. However, there are still hurdles such as red tape and financing to overcome if it wants to continue on its strong growth path.

Solar Energy Systems installed this 49.1 kW solar PV System on the rooftop on the Novelty Crystal Corporation in Queens, New York.

The commercial photovoltaic market grew by 79 percent in 2010. Image: NREL/Solar Energy Systems.

Speaking at the opening general session at the PV America Conference 2011, currently being held in Philadelphia, Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA) was jubilant. Quoting a recently released report - U.S. Solar Market Insight: 2010 Year in review, issued by SEIA and GTM Research - he stated that 878 megawatts (MW) of photovoltaics was installed in the country in 2010. This is more than double the 435 MW installed in 2009.

He added that the Mid-Atlantic/Northeast region is now the largest market for PV in the U.S., having installed more solar last year than the entire state of California.

Furthermore, according to the solar market report, in contrast to U.S. GDP growth of just 2.8 percent, the country’s solar market grew 67 percent in value in 2010. Consequently, it increased from USD$3.6 billion in 2009, to reach USD$6 billion last year.

State records

Broken down, 16 states each installed more than 10 MW of PV in 2010, in comparison to just four in 2007. What’s more, five states installed over 50 MW each, and New Jersey became the second state to install over 100 MW in a single year.

2010 cumulative PV installations by state:

  • California 258.9 MW
  • New Jersey 137.1 MW
  • Nevada 61.4 MW
  • Arizona 54 MW
  • Colorado 53.6 MW
  • Pennsylvania 46.8 MW
  • New Mexico 42.8 MW
  • Florida 35.2 MW
  • North Carolina 30.7 MW
  • Texas 22.6 MW
  • Rest of U.S. 135.2 MW

Commenting, Resch said: "If you think the New Jersey market is hot now, just wait. Last year, the state passed the Solar Advancement Act, which encourages utilities to buy more solar electricity from in-state sources. Over the next 15 years this requirement will grow by 1,700 percent (…) The New Jersey experience should be viewed by policymakers across the country as a case study in how to grow a sustainable PV market in a short time with smart policy."

He added: "Pennsylvania's breakout came in 2010 fueled by three factors: (i) The creation of Pennsylvania Sunshine Solar Rebate program; (ii) Federal Recovery Act funding for non-residential projects; and (iii) the emergence of Pennsylvania's SREC program."

Meanwhile, "Massachusetts is on the cusp of seeing its own SREC program take off. With the waning of the Commonwealth Solar rebate program, Massachusetts is turning toward an SREC market (…) we anticipate that the Massachusetts market will boom in the second half of the year. With your hard work and an economy looking to turn around, Massachusetts may be the next New Jersey."

Installation type

In terms of installation type, utility projects were said to have more than tripled in 2010, having reached 242 MW (2009: 70 MW). Furthermore, Resch stated that the residential market grew by 68 percent, the commercial by 79 percent, and the utility by "an incredible" 246 percent.

Overall, the report found that national weighted-average system prices fell by 20.5 percent over the course of 2010, from $6.45 per watt to $5.13 per watt. Much of this decline, it said, was due to a shift toward larger systems, particularly utility, in the fourth quarter of last year. However, it added that the U.S. PV market remains "highly disaggregated", resulting in a wide range of installed prices.

For example, residential systems were installed in certain locations (particularly Colorado and Arizona) at prices below $5.00 per watt, but other locations saw residential system prices over $8.00 per watt. On the other hand, non-residential installations ranged from $4.11 per watt to $7.31 per watt.

Manufacturing landscape

Despite fierce Asian competition, the U.S. manufacturing landscape continued to grow. The report stated that manufacturing of photovoltaic components increased "substantially" year-over-year for photovoltaic wafers (97 percent growth), cells (81 percent growth) and modules (62 percent growth). In total, it said the country produced 42,561 metric tons of polysilicon, 624 MW of wafers, 1,058 MW of cells, and 1,205 MW of modules in 2010.

However, it stated that competition from regions like China and Taiwan has introduced "significant challenges" over the past 18 months. As such, the U.S. saw the demise of three domestic PV manufacturing facilities last year: BP Solar’s wafer-cell plant in Maryland; Spectrawatt’s just-opened cell plant in New York; and Evergreen Solar’s integrated 160 MW wafer-cell-module plant in Massachusetts.

"Cost pressure on domestic plants is expected to continue to be an issue through 2011, meaning that additional plant closures will not come as a surprise," stated the report. "At the same time, however, 2011 should also see new plants being built, notably Wacker Chemie AG’s polysilicon plant in Tennessee, Flextronics’ crystalline silicon module plant in California, and Stion’s CIGS (Copper Indium Gallium Selenide) facility in Mississippi."

Hurdles

While growth has been described as "spectacular", there are still hurdles to overcome. As the SEIA president explained: "The biggest challenge facing the solar industry today - whether you are installing small or large systems - is financing."

He continued by saying that the association has put together a policy initiative designed to improve the situation. It includes the following five points:

  • Campaigning for the extension of the 1603 program;
  • Creation of a clean energy bank “to provide long-term low cost financing”;
  • Modification of the existing tax code to attract more investors. "Specifically we need to allow Master Limited Partnership to be able to use the tax credits";
  • The ability of the Federal Government to enter into long-term electricity contracts under a power purchase agreement; and
  • Development of a national clean energy standard that deploys solar.

However, as Resch stated, "it's not just financing that needs an overhaul". He went on to say that the red tape surrounding the industry is too restrictive.

"I have spoken to so many of you about the mountains of paperwork you have to fill out, the maze of local, county and state offices you have to interact with, just to connect a new system to the grid," he explained. "We need national standards that cut the red tape preventing you from reaching new customers.

"We need you to call your Congressmen, show them the projects you are building and tell them about the American jobs you are creating right in their districts. Those are the most important messages they can receive- and they have to come from you, not from SEIA."

The future

The report also analyzed the potential for photovoltaics in the U.S. in 2011. It stated that this year will be "pivotal". But, while installations are expected to double last year’s total, the expiration of the Treasury Cash Grant program at the end of the year, and the potential rescission of Federal Loan Guarantee funds, remain a concern.

Additionally, it said that incentive availability will not ramp up at the same pace as
expected demand. "It is therefore imperative," it explained, "that projects soon become viable with only the available federal incentives. The U.S. market will be strong in 2011, but this transition will be necessary to avoid a potentially disappointing 2012 and beyond."


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