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U.S. Solar Market Blooms, Challenges Remain

Federal lawmakers are fighting over budget and programs that would hamper the U.S. solar market, so any numbers to show the solar industry's contribution to the economy will help. So here comes a report released Thursday by the Solar Energy Industries Association that showed the U.S. solar market grew 67 percent to reach $6 billion in 2010 from $3.6 billion in 2009.

The $6 billion reflected the sales of solar energy equipment including photovoltaic (PV) systems, concentrating solar thermal equipment and solar heating and cooling systems, said Shayle Kann, managing director of solar practice for GTM Research, which co-produced the report. Gear for producing solar electricity added 956 megawatts last year, bringing the cumulative installations in the United States to 2.6 gigawatts.

The 956 megawatts include 878 megawatts from PV systems while 78 megawatts from concentrating solar thermal equipment.  The 878 megawatts were systems connected to the grid and reflected a 102 percent jump from 435 megawatts added in 2009, the report said. The cumulative PV installations in the country reached 2.1 gigawatts in 2010.

The growth seems to corroborate with the industry’s expectation that the United States will become the largest market one day. Germany was the largest market last year, followed by Italy. Generous government subsidies in these two countries helped to add 17 gigawatts of PV systems worldwide in 2010, up 130 percent from 2009. As a result, the U.S.’s share of the global market actually fell to 5 percent in 2010 from 6.5 percent in 2009.

That trend is likely to reverse this year and beyond, however, Kann said.

“The U.S. market has the potential to double again in 2011 whereas the global market isn’t likely to do the same,” Kann said. “In the next two years, we’ll see the U.S. market increasing its share in the global market.”

The United States could become the largest solar market by 2015, said Tom Kimbis, director of policy and research at SEIA.

The growth has largely come from state policies that mandate renewable energy consumption and federal policies that provide grants, loan guarantees and tax credits to solar project developers and equipment manufacturers.

A federal program that covers 30 percent of the cost of a solar power project propelled the growth significantly, and the industry fought for its renewal last year. The program materialized under the American Recovery and Reinvestment Act of 2009, and Congress extended by one year last December. Solar companies are hoping lawmakers will allow the program to continue after this calendar year.

Another sought-after program, which provides loan guarantees, has been under scrutiny by Republicans who are looking to make big budget cuts. The U.S. Department of Energy also recently drew criticism from its own inspector general for not keeping good electronic records of loan guarantee program. The program has offered billions of dollars in loan guarantees to solar project developers including First Solar, BrightSource Energy and Abengoa Solar. Equipment manufacturers that have gotten loan guarantee offers to build factories include Abound Solar, SoloPower and Solyndra.

Installations in the residential and commercial segments, including projects for government agencies, schools and nonprofits, fell in their market shares. Residential projects accounted for 30 percent of the systems added in 2010, compared with 36 percent in 2009, the SEIA/GTM report said. Commercial installations declined from 48 percent in 2009 to 42 percent 2010. Utility-scale projects grew from 16 percent to 28 percent.

Utility-scale projects are expected to drive a bulk of the growth in the next five years because many utilities are signing power purchase agreements or developing their own projects in order to meet their state mandates to increase the amount of renewable electricity they buy and sell. In 2010, developers planted 242 megawatts of utility-scale power plants, compared with 70 megawatts in 2009.

States have relied on different types of policies to spur renewable electricity generation.  Rebates, renewable energy credits trading and feed-in tariffs (guaranteed solar electric pricing) have been key tools for states to encourage utilities and consumers to embrace solar and other sources of renewable energy.

Kimbis said several obstacles are hampering the solar industry’s growth, including rules by homeowners association to restrict rooftop PV systems to the availability of transmission lines to transport and distribute solar electricity. 

 

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