US solar outpaces global market and remains "bullish"21. September 2011 | Top News, Applications & Installations, Industry & Suppliers, Global PV markets, Markets & Trends | By: Nicholas Stone
Lower prices and a rapidly changing global landscape have pushed the solar market in the U.S. to post record second quarter growth and keep the market growing at a "bullish" rate. New Jersey has overtaken California as the leading non-residential market.
According to the new GTM Research and Solar Energy Industries Association (SEIA) quarterly U.S. Solar Market Insight report, grid-connected photovoltaic installations in the second quarter of 2011 grew 69 percent over the same period last year and 17 percent over the first quarter of 2011.
The installed capacity in the U.S., at the time of the report’s release, reached a total of 314 megawatts (MW). Cumulative grid-connected photovoltaics in the U.S. has now reached 2.7 gigawatts (GW).
"On the whole, the U.S. is currently the strongest, most stable national growth market for PV," the report said. "This is reflected both in the numbers and in the chatter from global suppliers, distributors, and developers, all of which are bullish on near-term U.S. demand.
"By the end of 2011, the U.S. market has the potential to nearly double its global market share and support a more equitable distribution of installation types than has previously been seen in any leading demand center."
SEIA president and CEO Rhone Resch described this as an "incredible amount of growth" during a press teleconference on Tuesday. "Even in this tough economy, the U.S. solar industry continues to be one of the fastest growing in America," he said.
The utility and commercial solar market segments grew 37 percent and 22 percent, respectively, during the second quarter. The residential photovoltaic segment slowed, installing 60 MW, a 5.7 percent drop over last quarter. Still, the industry's overall growth means it is powering the equivalent of 630,000 homes.
New Jersey also overtook California as the leading non-residential market, making it the largest in the country.
Prices in photovoltaic modules began to fall in earnest early in the second quarter, prompted by the global drop in prices. Given that there is generally a delay for changing component prices to filter downstream into installations, the report expects that these impacts will help drive second half installations during 2011.
Despite the strong growth, overall global market conditions still impacted upon the U.S., with the slowdown in global demand leading U.S. module production to fall 11 percent in the second quarter to 333 MW.
The pace of the market is also expected to slow as government programs come to an end and a slowdown in the booming north eastern marketplace that has helped drive growth.
"The potential expiration of the 1603 Treasury program, along with current malaise in major markets, such as New Jersey and Pennsylvania, threaten to slow growth in 2012," said Shayle Kann, MD of Solar at GTM Research, during the teleconference.
"Still, with increasing market diversity and the continued emergence of the utility-scale solar market," he said, "we anticipate that the U.S. market share of global installations will triple over the next four years."
Reassessment of the U.S. position and Solyndra
A first-half slowdown in major European markets, particularly Germany and Italy, combined with continued strength in the U.S. market is leading many manufacturers and developers to seek opportunities in the U.S.
According to the report, many commentators suggest it will become the biggest market in the world within a few years, despite some jitters following the much publicized failure of Solyndra.
The report also says that three major questions will impact upon the market in the near future: market elasticity, Section 1603 Treasury expiration and the thinning backlog of major projects.
The U.S. has not traditionally had a price elastic market, but as prices drop and state-level incentives become less, the report suggests that elasticity could emerge.
Resch also spoke about the Solyndra bankruptcy during the press conference, which has attracted Congress’ attention due to concerns of public moneys being spent on what some have described as an uncertain industry.
"Frankly, it is disappointing to all of us, especially when the U.S. struggles to get out of a recession," said Resch. "The fact is that Solyndra had a very innovative product that faced pressure in a very competitive product."
Decline in costs meant that the company could simply not compete as the oversupply of crystalline silicon impacted markets around the world.
"Ultimately, I think the competition is good for the solar industry and certainly for solar customers. It drives down costs making solar more affordable and really opens up markets in more states around the country. And that is exactly what we’ve seen in the second quarter of 2011."
The overall market remains dominated by a few key states, but the report suggests that the Midwest is developing quickly and could provide opportunities moving forward.
In total, over 600 MW of concentrated solar power and concentrated photovoltaics are now under construction in the U.S.
Three sector market and prices
A growing utility sector and a "disappointing" residential quarter has led the report to declare that, in the longer term, the U.S. market has the potential to share three vibrant, growing market segments, each contributing a meaningful share of total demand.
Non-residential installations, the third sector, experienced a very strong second quarter, but of the three has the most unclear future.
Residential system prices remained virtually flat from first to second quarter in 2011, with the national average installed price increasing from $6.39 per watt (/W) to $6.42/W.
Non-residential system prices fell by 2.3 percent from during the same period, from $5.32/W to $5.20/W. While utility system prices declined for the sixth quarter in a row, dropping from $3.85/W in the first quarter of 2011 to $3.75/W.
The report still predicts that 2011 will see a near doubling of the overall U.S. market size. Principally, residential and utility forecasts for 2011 have been revised downward, while non-residential forecasts have received a boost.
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