There’s strength in US numbers for Q2 201210. September 2012 | Applications & Installations, Global PV markets, Industry & Suppliers, Markets & Trends | By: Cheryl Kaften
The U.S. solar sector has just finished its second-best quarter in history, having installed 742 MW of photovoltaic power – and its best quarter on record for utility deployments – according to a report released today by Boston-based GTM Research and the Washington, DC-based Solar Energy Industries Association (SEIA). Photovoltaic installations were up 45% over Q1 2012, and up 116% over Q2 2011.
According to the report, "U.S. Solar Market Insight: 2nd Quarter 2012," out of the aggregate 742 MW in residential, commercial, government, and utility deployments, 477 MW were power company installations.
Indeed, more than 20 U.S. utility projects were completed during the second quarter, including a mixture of larger, multi-phase projects (Agua Caliente and Mesquite Solar, both in Arizona) and smaller stand-alone installations (Silver State North in Nevada and McHenry Solar Farm in California).
Eight states posted utility photovoltaic installations of 10 MW: California, Arizona, Nevada, Texas, Illinois, North Carolina, New Mexico and New Jersey. What’s more, there are now 3,400 MW of utility photovoltaic power under construction, indicating that the market will remain strong through year-end.
"The U.S. solar industry is rapidly growing and creating jobs across America, despite the slow economic recovery," said Rhone Resch, president and CEO of SEIA. "More solar was installed in the United States this quarter than in all of 2009, led for the first time by record-setting utility-scale projects. With costs continuing to come down, solar is affordable today for more homes, businesses, utilities, and the military. Smart, consistent, long-term policy is driving the innovation and investment that’s making solar a larger share of our overall energy mix."
This report tracked 24 states individually, as well as Washington, D.C., and while most market dynamics remain state-specific, a few trends were consistent throughout the country:
- Average system prices dropped 10% from Q1 2012, bringing the market ever-closer to the point where residential and non-residential demand is driven more by solar radiation and retail electricity prices than by state-level incentives;
- The residential third-party financing model continues to gain steam in every market in which it has been introduced;
- The non-residential market has struggled where incentive levels or solar renewable energy certificate (SREC) prices have declined, particularly in California and New Jersey, implying that system costs must fall even further before state incentives become unnecessary; and
- The volume of utility installations is booming, but new utility procurement is slowing down, leaving some earlier-stage projects in limbo as developers turn their attention to more promising prospects.
For the fourth consecutive quarter, the U.S. residential solar market grew incrementally, with 98.2 MW installed. California, Arizona and New Jersey led home installations nationally, with the smaller-market states of Hawaii, Massachusetts, and Maryland demonstrating strong quarter-over-quarter growth.
The residential market has been buoyed up by consumer acceptance of third-party solar ownership models, according to the report, which found that, for the first time, the price of an average installed third-party-owned system was lower than that of a system purchased outright: US$5.64( €4.41) per-watt for third-party versus $5.84 (€4.56) per-watt for directly-owned solar systems. In California, Arizona, and Colorado, third-party residential solar accounted for over 70% of total Q2 2012 installations.
The success of third-party residential solar providers has attracted more than $600 million (€470 million) in new investments in recent months. Leading financial institutions have raised company-specific funds for solar providers to either offer to installer partners or use to install systems under their own name. This influx of cash into the residential space signifies the growing acceptance of solar leases as a secure investment and a unique way to reduce tax liability for the project owners, which in this case are the investors. It is expected that third-party installations will quickly claim even more market share in the coming quarters.
"We’re starting to see innovative PV business models take a substantial hold in the U.S. residential market," said Shayle Kann, vice president of Research at GTM. "The success of third-party residential solar providers has attracted more than US$600 million (€470 million) in new investments in recent months. This influx of cash into the residential space signifies the growing acceptance of solar leases and power purchase agreements as a secure investment for project investors. We expect that third-party installations will claim even more market share in the coming quarters."
However, the non‐residential (commercial, government, non-profit) segment contracted, plummeting from 291 MW in Q1 2012, to 196 MW during the second quarter. Although California (down 45%) and New Jersey (down 35%) contributed to a large part of the decline, these states were not alone. Only ten of the 24 states the report tracked individually saw growth in the non-residential market in Q2 2012. This trend was likely due to a combination of factors. In some individual markets, such as New Jersey, it was a result of state-market-specific factors, such as solar renewable energy certificate (SREC) oversupply. In other states, Q1 2012 had been bolstered by safe-harbored 1603 Treasury Program installations.
As for concentrating solar power (CSP and CPV), at the end of Q2, there was a cumulative 546 MW of capacity operating in the United States. During the quarter, Cogentrix’s 30 MW ac CPV Alamosa Solar in Colorado came on-line, and 2 CSP projects – the 100 MW Quartzsite Project in Arizona and the 100 MW Moapa Solar Energy Center in Nevada – were expedited under President Barack Obama’s We Can’t Wait initiative.
Finally, GTM Research forecasts that 3.2 GW of photovoltaics will be installed in the United States overall this year, representing 71% growth over 2011. Given this forecast, U.S. market share of global installations will rise to more than 10%, from 7% in 2011 and less than 5% in 2010.
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