While relatively young, the solar market is an increasingly important and vital part of the American economy. What are the trends in this booming market, and what forces are at work? Which sectors of the market are strongest, and why? What are the prospects for solar energy in the near future? For the seventh year, I've authored IREC's U.S. Solar Market Trends, an annual report that answers these questions by gathering and analyzing public data on U.S. solar electric installations by technology, state and market sector.
There's a host of reasons this information is important to present in this form. It helps industry, government and non-profit organizations improve their efforts to increase the number (and capacity) of solar installations across the country. Analysis of multi-year installation trends and state installation data helps these stakeholders learn more about state solar markets, and evaluate the effectiveness of marketing, financial incentives and education initiatives.
So what were the major drivers of continued growth in 2013?
The list isn't long and all had a considerable impact: falling photovoltaic (PV) prices, strong consumer demand, available financing, renewable portfolio standards (RPSs), and financial incentives from the federal government, states and utilities.
The federal Investment Tax Credit (ITC) of 30 percent of the installed cost is an important foundational incentive for most solar installations. Installed prices for distributed PV installations fell by at least 11 percent in 2013 and have fallen by 44 percent since 2009. The prices of some individual system components, especially modules, have fallen even more. Lower prices naturally increase consumer demand.
More than 4.6 GWDC of PV installations were completed at 155,000 sites in 2013. The capacity installed in 2013 was 36 percent greater than the amount installed in 2012.
Growth is largest for small installations (residential) and the largest installations (utility-scale). The residential sector is making the transition away from markets based on state and utility rebates and incentives. The utility sector now faces a similar transition away from markets based on renewable portfolio standard (RPS) policies.
Though their impact on the total market is declining, rebates are still important state policies, especially for smaller installations. Five years ago, owners of most PV installations received a cash rebate from a state or utility incentive program, and this rebate was arguably the most important element of the financial package. In that era, no state had a significant amount of installations without a rebate program. For the past three years, incentive expenditures have been declining, in part because incentive levels have declined and in part because some states have phased out these programs. Despite lower incentive expenditures, the installed capacity of PV facilities continues to increase. When PV is less expensive, less incentive money is necessary to encourage installations.
The markets for solar technology are concentrated in a few states. In 2013, more than three-quarters of grid-connected PV capacity installed was concentrated in California, Arizona, North Carolina and Massachusetts. California represents 57 percent of all U.S. PV capacity installed in 2013. In the rest of the country, 18 percent less PV capacity was installed in 2013 than in 2012.
Of the Top Ten States for 2013 capacity installations, California, North Carolina and Georgia more than doubled their totals from the prior year. Georgia and Texas joined the Top Ten Installation list for 2013, replacing Nevada and Colorado. Colorado and Nevada both saw a large decrease in utility installations – 66 MWDC and 200 MWDC, respectively. Although Colorado saw a 49 percent increase in distributed capacity installed, it was not enough to offset the large drop in utility installations.
The U.S. PV market growth will continue in 2014, with larger utility sector projects leading the way. Over the near term, the prospect for growth in solar installations is bright in all sectors. The residential sector is growing in a large number of states, and many utility sector projects are under construction or contracted and will be completed in 2014 or later. The federal ITC, continued falling prices, state RPSs, and on-going net metering policies will sustain the market.
Important Trends At a Glance
Concentrating Solar Power
Just published July 15, 2014, U.S. Solar Market Trends 2013 contains 16 graphs and tables that illustrate these trends.
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