On the back of another record year for the U.S. PV market, which saw 3.31 GW installed, 2013 forecasts are for 4.3 GW of new capacity. However, while utility-scale projects dominated the PV landscape in 2012, the sector is not expected to lead this year. Three future trends have further been identified.
The "powers that be" in the U.S. energy industry have accepted, adopted – and now are advocating for – solar power, according to a new report conducted on behalf of the Washington, DC-based Solar Energy Industry Association (SEIA) by Boston-based GTM Research.
Despite the fears of the downstream side of the industry, the resolution of the antidumping (AD) and countervailing duty (CVD) complaints by U.S. solar manufacturers against their Chinese competitors – and the imposition of punitive tariffs on China’s solar cells – have had little effect.
Instead, the report, "U.S. Solar Market Insight Report: 2012 Year in Review," finds that America saw a historic spike in installations. Specifically, U.S. PV deployments grew by 76% over 2011, to a record-breaking total 90,000 installations or 3.31 GW in 2012, with an estimated market value of US$11.5 billion (€8.8 billion). As such, cumulative PV capacity is now sitting at 7.7 GW.
"There were 16 million solar panels installed in the U.S. last year – more than two panels per second of the work day – and every one of these panels was bolted down by an American," said Rhone Resch, president and CEO of SEIA, adding, "We’ve brought more new solar online in 2012 than in the three prior years combined ... This growth simply would not have occurred without consistent, long-term policies that have helped to ensure a stable business environment for this country’s 5,600 solar companies – many of them small businesses."
While low pricing drove installations, upstream, the manufacturers continued to grapple with high inventory and low sales margins. The table below shows the price changes over the four quarters of 2012:
Overall, annual weighted average U.S. PV system prices fell 26.6% from $4.10/W to $3.01/W. "Individually, average residential and utility prices decreased, while non-residential prices were up slightly quarter-over-quarter," read the report.
Looking at the residential market, alone, average annual prices fell from $6.16/W to $5.04/W. "Installed prices came down in most major residential markets, including California, Arizona, New Jersey, and Massachusetts, and in a number of states fell below $4.00/W," it continued. However, in some states, prices were as high as $7/W.
Meanwhile, non-residential PV system prices dropped from $4.65/W to $4.27/W. Despite this, Q4 prices increased 1.4%. The report attributes this rise to a "large quantity" of higher-cost, government projects connected in California. It added that SREC states saw the most significant price declines. Again, in some states, prices as high as $8/W were seen.
Finally, utility system prices fell from $3.20/W in Q4 2011 to $2.27/W by the end of the year.
Following years of announcements and preliminary milestones, there were 152 utility installations in 2012. Eight of the 10 largest U.S. solar projects operating today were completed last year, representing 54% of total installed capacity, or 1.782 GW. Of this aggregate amount, 874 MW came online during the fourth quarter alone. Overall, there is a utility pipeline with PPAs secured, totaling 10.5 GW, of which 31.5 GW are under construction.
The utility market continues to be dominated by installations in the desert southwest. Several major projects are set to come online soon and one already is in operation, among them:
- BrightSource’s 392 MW Ivanpah project in California;
- Abengoa’s 280 MW Solana Generating Station in Arizona; and
- SunPower’s 1 MW project at Arizona State University.
The top utility-scale markets of 2012, in descending order, were Arizona, California, Nevada, North Carolina, and New Jersey.
While the study forecasts that utility-scale projects will decline in 2013, in comparison to 2012, "pockets of new utility growth" will be seen in locations including North Carolina and California.
Non-residential and residential capacity
In contrast to the utility segment, the non-residential market – commercial, governmental, and non-profit systems – grew by 26% (or 1.043 GW installed) over 2011 (826 MW). New Jersey started strong, but in an oversupplied SREC (Solar Renewable Energy Certificate) market, business fell off by mid-year and did not recover.
California also experienced a slump several months into 2012, but came back to clinch its largest non-residential quarter ever in Q4. Still, New Jersey did well enough to rank as the number two state in the sector for the year, right behind California and ahead of Massachusetts, Arizona, and Hawaii.
With 488 MW installed in 2012, representing 62% annual growth over 2011 (302 MW), the residential market demonstrated vitality for the 12-month period. Compared to the other segments, distributed solar sales were steady, with little fluctuation.
In 11 of the past 12 quarters, the residential market has grown between 4 and 21%. The only major state residential market to shrink year-over-year was Pennsylvania, which fell from 17 MW installed in 2011 to 7 MW in 2012. The top five states in the residential category were California, Arizona, Hawaii, New Jersey, and Colorado, with Hawaii on the brink of price parity with the grid.
Much of the growth in the residential markets can be attributed to a diversification in project financing. Market participants have laid the groundwork for a variety of new ways to finance solar projects. Some of these, such as the PACE (Property Assessed Clean Energy) program and Mosaic’s crowdfunding website, have been introduced already and now need to scale, while others may become available for the first time this year.
Examples of new financing structures include solar real estate investment trusts (REITs), securitized solar assets, and solar inclusion in master limited partnerships (MLPs).
State of the states
Overall, at the state level, 2012 was another recording-breaking year, with 11 states installing over 50 MW each, compared to 8 in 2011. California became the first state to install over 1 GW in one year, with growth across all market segments. Arizona came in as the second largest market, led by large-scale utility installations; while New Jersey experienced significant, but somewhat stunted, growth in the state’s non-residential market.
The top 10 largest state solar markets in 2012 (in descending order of MW of PV installed) were: California (1,033), Arizona (710), New Jersey (415), Nevada (198), North Carolina (132), Massachusetts (129), Hawaii (109), Maryland (74), Texas (64), and New York (60).
Both North Carolina and Massachusetts grew substantially in 2012, driven particularly by ground-mounted projects between 1 and 10 MW. Nevada took fourth place thanks largely to a number of utility-scale projects reaching completion. Overall, a few states (specifically, Colorado and Pennsylvania) declined year-over-year when individual utility projects are removed from the equation.
Looking ahead to this year, the researchers forecast that 4.3 GW of PV will be installed in the U.S. This would represent a 29% increase over 2012 – unquestionably down from the expansion experienced during the past few years, but still well above the global growth rate.
The reduced growth is expected to come from a fall off of utility-scale installations. Indeed, while they increased by 134% in 2012, only 31% growth is projected for 2013.
Over the next four years, the residential and non-residential markets are expected to gain market share as system prices decline, the industry becomes even more efficient, and new financing channels open up. "All of these data point to solar having turned the corner," added Resch. "Solar is an affordable option for homes and businesses today, and is well on its way to becoming a substantial part of America’s energy portfolio."
Looking beyond 2013, the researchers see the development of three major trends. First, they believe that market growth will become more consistent, as well as more moderate. The forecast calls for a 28% compound annual growth rate (CAGR) for the period between 2013 and 2016 – down from the 82% CAGR between 2009 and 2012, but definitely more sustainable.
Second – and no surprise, since the severe storms and outages of the past year have encouraged consumers to look for backup power generation and storage – the researchers anticipate a rise in distributed generation.
Finally, assuming the Solar Investment Tax Credit (ITC) in the U.S. is not extended past its current expiration date of December 31, 2016, the final year of the ITC will be a banner year for the U.S. solar market as developers rush to complete projects.
Edited by Becky Beetz.
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