Released by SEIA and GTM Research, the report, ‘
In the first quarter of 2011 alone, the U.S. installed and grid connected 252 megawatts (MW) of new photovoltaics capacity. While this is a 66 percent increase on the first quarter of 2010, it does represent a 110 MW sequential decline.
However, the report says that two factors must be taken into consideration when viewing these figures. Firstly, the fourth quarter 2010 totals were boosted by the completion of 167 MW worth of utility photovoltaics, compared to just 33 MW in the first quarter of 2011.
"The utility PV market remains lumpy as the completion of only a few plants can represent a huge swing in capacity additions from quarter to quarter, so little meaning should be attached to this variability," it explains.
Secondly, one needs to consider the seasonal weather, which is a constant Q1 disturbance. "In 2010, for example," says the report, "only 17 percent of the total annual installations were completed by the end of March."
Despite this year-on-year increase, the countrys global share of installations declined by six percent from 2009 to hit just 5.1 percent "due to even faster growth abroad".
"Over the past six years," the report continues, "the U.S. has been growing at a relatively even pace with the global market; as a result, U.S. market share of global installations has consistently hovered between five percent and seven percent since 2005.
"In 2011, however, this pattern is likely to end. A slowdown in major European markets (most notably Italy and Germany), combined with the continued strength of the U.S. market, has already led most PV manufacturers and developers to seek opportunities in the U.S."
The non-residential sector accounted for the most photovoltaic growth, having increased 100 percent over the first quarter of 2010. However, if the overall market is to double in size by the end of the year, to 2.3 GW, as industry predicts, "the market will need to ramp up even faster". The report believes that due to the project pipeline in place and the declining module prices, this figure "remains likely".
In terms of non-residential installation spread, the report says that in seven of the 21 states it individually tracked, the market grew by more than 100 percent year-on-year. "( ) some of this growth can be attributed to the expected cash grant expiration. However, reduced prices and the growth of multi-MW commercial projects also contributed to increased installations," it noted.
Meanwhile, the volume of residential installations "marginally" increased in the first quarter. This segment, says the report, has experienced "relatively stable growth" since last year. Third party ownership remains the most influential story, through either power purchase agreements (PPAs) or leases.
Utility installations, on the other hand, were described as being "relatively light" in the first quarter of the year. However, the report predicts that 2011 is set to be a record one for this segment, with 886 MW in the pipeline.
As aforementioned, there are several factors driving U.S. photovoltaic growth. In addition to weakened demand in Europe, the report cites two key factors, which it says must be considered individually "because they have very different implications for future market growth". They are: market fundamentals; and 2010 overhang.
In terms of market fundamentals, the report says that market conditions have improved, including lower balance of system costs, the emergence of new business models and new promotional incentives. "These are ongoing factors that will continue to drive growth into the future," it explains.
2010 overhang, on the other hand, relates to projects which were started last year, but completed in 2011. The report says that there are three consequences related to 2010 overhang: "First, it helps explain the fact that total module shipments to the U.S. in 2010 greatly exceeded installations; many of these shipments resulted in installations completed in Q1 2011.
"Second, it implies that one should exercise caution when forecasting installations for the remainder of 2011. A specific situation contributed to the Q1 non-residential market growth and is unlikely to repeat in Q2-Q4.
"Finally, given that the cash program is currently slated to expire at the end of 2011, we are likely to see a similar dynamic play out this year. Namely, there will be a mid-year boom in incentive applications, a late-year boom in module and inverter shipments, and a Q1 2012 boom in non-residential installations."
Situation of the states
Overall, the report finds that seven states – of which California and New Jersey, respectively, are the top two – installed 88 percent of all photovoltaics in the first quarter of the year, up from 82 percent last year.
"It should also be noted that few utility installations were completed in Q1, so fewer large individual projects are skewing the results," says the report. "These gains came almost entirely from California, which increased from 38 percent to 45 percent year-over-year, while New Jersey and the next five states remained virtually even."
New Jersey was highlighted as having demonstrated the strongest growth in 2010 and 2011. In the first quarter of the year, for example, 42 MW was installed, which represents a growth of 49 percent over the first quarter of 2010.
Looking at the domestic manufacturing situation in the U.S. in the first quarter of 2011, SEIAs report says that "two concurrent and contrasting trends" occurred.
"On one hand, production from export-oriented firms and facilities dipped quite materially on account of soft demand conditions in the key feed-in tariff markets of Germany and Italy through the first few months of the year. At the same time, plants that serve the domestic market enjoyed far healthier utilization of manufacturing capacity given a robust demand environment in the U.S.," it explains.
In terms of photovoltaic module manufacturing, the U.S. produced 348 MW, which is a 17 percent sequential increase. It says though, that foreign demand is "sluggish" with the Italian market having almost come to a "complete standstill".
For 2011 as a whole, the report finds that the decreased demand in Europe will have three primary effects.
Firstly, there will be increased capacity allocation. It is expected that suppliers will ship more products to the U.S. than was projected at the end of 2010. Secondly, both module and inverter prices will continue to decrease, and, thirdly, there will be increased supplier competition.
"All these factors are positive signs for the U.S. market and have prompted us to increase our U.S. market forecasts for 2011 and 2012. However, it should be noted that we still do not anticipate a single ‘boom' year (…)," concludes the reports photovoltaic section.
Watch out for the August edition of pv magazine, which will contain a more in-depth analysis of the U.S. market and where it is headed this year.
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