Five Key Takeaways from the U.S. Solar Market Trends Report

Larry Sherwood, IREC
August 17, 2012 | 4 Comments

The solar market, while relatively young, is an increasingly important part of the American economy. My latest IREC report answers important questions about the solar market. What are the trends in the 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?

1. Photovoltaic markets are growing quickly

Last year was another banner year for solar, with large increases in both the number and average size of photovoltaic (PV) installations. The capacity of PV installations in 2011 more than doubled, compared with 2010 installations. More utility-scale systems and an increase in the average system size accounted for this dramatic growth. The total capacity of utility and nonresidential systems installed in 2011 increased by 145% and 132% respectively compared with 2010. The average size of all PV installations grew 64% in 2011, to 29 kW_DC.

Fig. 2: Annual Installed Grid-Connected PV Capacity by Sector (2002-2011)

2. Installations are concentrated in a few states

In 2011, more than two-thirds of grid-connected PV system installations were concentrated in California, New Jersey, Arizona and New Mexico, as shown. Of the top 10 states, Arizona had the highest growth, with more than 4.5 times as many installations as the year before. The market more than tripled in New Mexico and New York, and more than doubled in California, New Jersey and Hawaii. On a per capita basis, six states — Arizona, Colorado, Delaware, Hawaii, New Jersey and New Mexico — had more installations than California in 2011, demonstrating how the market is diversifying across the country.

2011 Rank by State	2011 (MW_DC)
1. California	537.8
2. New Jersey	306.1
3. Arizona	287.8
4. New Mexico	122.1
5. Pennsylvania	78.2
6. Colorado	75.5
7. New York	68.3
8. Texas	51.1
9. North Carolina	45.5
10. Hawaii	40.5
All Other States	232.0
Total	1,844.9

3. Utility-sector PV installations more than doubled in 2011 compared to 2010

The utility sector’s share of all U.S. grid-connected PV installations grew from virtually none in 2006 to 15% in 2009, to 32% in 2010, and to 38% in 2011. Of the 10 largest PV installations in the United States, five were installed in 2011. The two largest U.S. PV installations installed in 2011 were the 49-megawatt DC (MW_DC) Mesquite Solar 1 Plant in Arlington, Ariz., which supplies power to Pacific Gas and Electric Co. customers in northern California, and the 35-MW_DC plant in Webberville, Texas, which supplies power to Austin Energy.

4. The average size of non-residential distributed installations is increasing

The capacity of non-residential sector installations, like government buildings, retail stores, warehouses, and military installations, more than doubled in 2011 compared to 2010. The average size of a non-residential distributed installation grew by an astounding 46%. The largest installations to date in this sector were a 9-MW_DC installation at Gloucester Marine Terminal in Gloucester City, N.J., and a 6-MW_DC installation at the U.S. Air Force Academy in Colorado Springs, Colorado. Favorable economics for consumers and a rush to complete installations before the expiration of the Treasury 1603 Grant program at the end of 2011 fueled this explosive growth.

5. Policy remains the most important market driver

Federal tax credits and cash grants are an important financial component of most installations. State policies affect PV installations, with most installations happening in the few states with favorable solar policies. Though their impact on the total market is declining, financial rebates have historically been the most important state policy initiative, especially for smaller installations. State renewable portfolio standards (RPSs), which mandate that utilities generate a percentage of their power from solar or other renewable sources, tend to encourage larger installations. These are fast becoming the most important state policy tool. Installed PV costs are declining and there are now a few markets where PV costs compete with electricity prices.

4 Comments

ANONYMOUS
September 1, 2012

Look into companies that RENT solar panels. They own and keep the panels in working order. They design the system to meet your homes energy needs. They do require a contract. 10 year contracts seemed to be the average, and this locks in your energy cost for the contract period.

Rematog - The Original
August 21, 2012

For residential rooftop, another issue that will need to be addressed is the cost of insurance. In the Gulf Coast, the Wind/Hail (read Hurricane) portion of the homeowners policy can be more (twice) the rest combined. In my state, Allstate will not even write wind/hail, instead I have to use a State run insurance carrier for that portion.

If I invest 20, 30 or 40 thousand dollars (with a second mortgage?), I'd HAVE to have it insured. If the cost of insurance is too much, than you can't justify intalling rooftop solar, standardized electronics or not....

AMY HEIDNER
August 21, 2012

If the only considerations were electrical, perhaps we could eliminate permitting. Unfortunately there are often structural considerations, which are not amenable to standardization given the wide variety of building stock. Structural considerations drive choice and location of rooftop mounting systems.

Louis Shaffer
August 21, 2012

The one thing that scares me is that many countries have experienced a boom in Utility, followed by a realization that this creates a bubble. There is room for both, but I would like to see much more balance between rooftop and open field than we see here. Otherwise, we risk to wind up with the bubble bursting (see Spain, Czech Republic, Ukraine...). The lucky thing for the US is that PV prices are falling fast, and if we get our act together and follow best practices from those with more experience, we should be able to move past incentive based PV in a very short time. One practical step - push for a single standard for rooftop power in terms of the balance of system, then push that utilities must accept this power up to set limits. That means eliminating permitting and only having fines for installations not done to the standards. We would see the costs for projects drop very quickly.

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Larry Sherwood

Larry is President of Sherwood Associates, a renewable energy consulting firm. Larry has nearly 30 years of experience in the renewable energy field. He is Project Administrator for the Solar America Board for Codes and Standards, Executive...