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Residential Demand Spurs US Solar Installations in 1Q13

Big growth in residential solar demand, bucking broader market volatility and seasonal trends, set the pace for yet another record quarterly performance for U.S. solar installations during the first three months of 2013, according to just-released analysis from the Solar Energy Industries Association (SEIA) and GTM Research.

U.S. solar energy installations totaled 723 megawatts (MW) from January through March, a 33 percent increase from a year ago and the solar sector's best-ever first-quarter performance. That's a big dropoff from the whopping 1300 MW of installed PV in the fourth quarter of 2012, but it's typical for this sector to see a late-year boom and subsequent early-year pause. (Similarly, a year ago U.S. solar installations surged in the final quarter of 2011 and then fell back in 1Q12.) The nation now exceeds 8.5 GW of cumulative installed solar electric capacity, of which 7.9 GW is PV. Solar nearly made up half (48 percent) of all new electric capacity installed in the U.S in 1Q13.

Here are some more nuggets from the U.S Solar Market Insights 1Q13 report:

  • Residential solar installations rose 53 percent year-on-year to 164 MW, with the utility segment more than doubling to 318 MW. Third-party-owned solar residential systems made up two-thirds of all residential PV installations in California (exceeding non-residential for the first time), and 86 percent of them in Arizona. Residential solar has managed to expand, at times well into double-digits, for 12 of the past 13 quarters. The only top-tier residential market to shrink in 1Q13 was Arizona, which fell 9%.
  • By comparison, the non-residential market slid 20 percent both quarter-on-quarter and year-on-year, thanks to decreased state-level incentives; the only non-residential solar to grow at all in 1Q13 was New Jersey which installed 65 MW, a 50 percent increase from the previous quarter. Look for growth later in the year for this segment of solar installs, particularly in California and New York.
  • Twenty-four utility PV projects were completed in 1Q13, including: Antelope Valley Solar Project Phase II (79 MW of the project's 230-MW total), Alpine Solar (66 MW), Apple's data center in Maiden, NC (20 MW); Catalina Solar Project (67 MW of eventual 143 MW); and Borrego Springs (30 MW). The pipeline of utility-scale projects with signed PPAs stands at 10.7 GW, about a third of which are under construction.
  • California remained the top solar PV state, but Arizona fell from second to fourth place overall, passed by New Jersey which added 76 MW in 1Q13 and Hawaii which added 44 MW to leap up from 7th to 3rd place. Also climbing the ladder were North Carolina (up from 6th to 5th place, swapping with Massachusetts), Tennessee (leaping from 15th to 7th), Colorado (13th to 8th), Pennsylvania (11th to 9th), and Florida (18th to 10th). Moving down were Arizona and Massachusetts, New York (10th to 13th), Maryland (8th to 18th), and Nevada (4th to 24th).
  • Speaking of California, it installed more new PV capacity than ever before, mainly attributed to a "retail rate" parity situation in some major utility territories — meaning a residential PV system can compete or beat retail electricity rates even with just the 30 percent ITC. (More good solar news from California: just after noon on Friday June 7, California's grid-connected solar power generation set a new high of 2.071 GW output according to California ISO, meeting more than five percent of peak demand. That's more than double the 1 GW mark set last September ... and also comes tantalizingly close to offsetting the roughly 2.25 GW that was lost when the San Onofre Nuclear Generating Station [SONGS] went offline in January 2012, and is now officially being closed for good.)
  • Average PV system costs were $3.37/W, a 24 percent drop over the past year, though that's about 10 percent higher than the previous quarter because of fewer utility-scale projects coming online. Residential systems fell about 16 percent Y/Y (2 percent Q/Q) to $4.93/W, non-residential also fell 16 percent Y/Y (8 percent Q/Q) to $3.92/W, and utility system prices declined 26 percent Y/Y but only 6 percent Q/Q to $2.14/W. Note that there's an especially wide range of installed PV prices by state, anywhere between $3-8/W.

 

U.S. PV installations by market segment. (Credit: SEIA, GTM Research)

SEIA and GTM predict more than 5.3 GW of installed solar energy will come online in 2013, including the first batch of large concentrated solar power (CSP) projects totaling 938 MW (ac). GTM Research's Shayle Khan predicted an acceleration in U.S. solar PV installations over the next four years as the economics continue to improve: roughly 4.4 GW in 2013, 5.3 GW in 2014, 7.0 GW in 2015, and 9.2 GW in 2016 (which is when the current federal investment tax credit runs out.)

Risks to distributed generation of solar PV are threefold, say SEIA and GTM Research:

  • Net metering revisited. As distributed generation expands, utilities are seeking to revise, cap, and even remove net metering. This will take different forms in different regions -- and varying degrees of resistance or acceptance -- but it will have major implications everywhere.
  • Utility electricity rate structures. How utilities set up their tariff structures, incorporating time-of-use pricing and fixed or volumetric charges, will have a significant impact on the economics of solar energy systems. "While net metering is currently a more public battleground, we anticipate that rate structures will soon follow behind," they say in the report.
  • Who's going to pay for it? Distributed generation could require more than $48 billion of investments from now through 2017 -- far exceeding what's been provided to date. There will be a need for new sources of capital, new financing models (think REITs and MLPs, and crowdfunding and community solar), and new investors in existing structures (tax equity). "Project finance could serve as a significant bottleneck to growth over the next four years," they write.

 

U.S. PV installation forecast and market segmentation. (Credit: SEIA, GTM Research)

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