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US Solar Growth 'Best Ever' During Q1, Driven by Residential Deployments
Green Technology Featured Articles
June 12, 2013

US Solar Growth 'Best Ever' During Q1, Driven by Residential Deployments

By Cheryl Kaften
TMCnet Contributor

Since the colonists declared their independence, Americans have defined themselves by an ethic of self-reliance, merit, and achievement. Within the next four years, that culture of autonomy and self-regulation will transform the U.S. solar market—driving it toward home-grown, distributed renewable energy generation—according to the results of a new report.


There are a multitude of reasons for the new solar revolution—among them, energy efficiency and cost reductions. But the most pressing is the need for preparedness. Specifically, at one end of the grid, you have the homeowner, who wants back-up generation (along with energy storage), in order to keep the lights on in during severe weather events. At the other end is the utility, which requires access to distributed generation in order to satisfy peak energy requirements.  

What’s more, the time for distributed generation (DG) is ripe, based on the findings of the study, “U.S. Solar Market Insight: First Quarter 2013,” conducted on behalf of the Washington, DC-based trade group, the Solar Energy Industry Association (SEIA) by Boston-based GTM Research.   Whereas residential and commercial solar markets historically have been effectively capped by the availability of state- and utility-level incentives, solar generation now is cost-effective in some markets with only the federal investment tax credit (ITC), accelerated depreciation and net metering.

The report highlights this shift in California, where a meaningful number of installations have been completed without California Solar Initiative incentives, which have been that market’s main driver since 2007. With the ITC currently in place through the end of 2016 and PV system prices continuing to fall each quarter, the DG market’s prospects have never been better.

However, the researchers warn that, along with this opportunity for exponential growth will come a new set of risks:

  • Net metering and the debate over how to value distributed generation: As the penetration of DG has grown, a number of utilities have sought to revise, cap, or remove net metering. This issue will play out differently across geographies but will have major implications everywhere.
  • Changing rate structures: Changes in the details of utility rates—such as how to incorporate time-of-use (TOU) pricing and fixed versus volumetric charges— can easily push solar into, or out of, economic viability. While net metering is currently a more public battleground, the researchers anticipate that rate structures will soon follow behind.
  • The availability and cost of project finance: The analysts estimate that the DG market will require $48.5 billion of investment during the period from now through 2017—which far exceeds all project finance provided to date. Market participants and advocates are working to secure new sources of capital, adapting financing models from other industries (such as real estate investment trusts and master limited partnerships), retail capital sources (crowdfunding, community solar), and new investors in existing structures (corporate and utility tax equity). Still, project finance could serve as a significant bottleneck to growth over the next four years.

 Best First Quarter Ever

In the meanwhile, the United States has enjoyed the best first quarter of any given year for the industry. This quarter’s report finds that the United States installed 723 megawatts(MW) in Q1 2013, which accounted for over 48 percent of all new electric capacity installed in the nation last quarter. In addition, the residential and utility market segments registered first-quarter highs with 164 MW and 318 MW respectively.

As explored in greater detail in the report, the residential market remains a highlight for U.S. solar— with 53 percent year-over-year growth. Unlike the non-residential and utility markets, residential solar has not exhibited seasonality and market volatility on a national basis; quarterly growth in the U.S. residential market has ranged from four percent to 21 percent in 12 of the past 13 quarters.

Furthermore,third-party owned (TPO) residential systems continue to be a major storyline in the market. In the key states of California and Arizona for example, TPO systems accounted for 67 percent and 86 percent respectively of all residential PV installed in Q1 2013.

In fact, the California residential market had a record quarter, installing more new PV capacity than ever before, and for the first time was greater than the non-residential market. This is largely driven by increased “retail rate” parity in major utility territories, where a residential PV system can provide a discount at retail electricity rates with few or no incentives other than the 30 percent federal investment tax credit (ITC).

The non-residential market shrank 20 percent on both a quarterly and annual basis, which reflects slow demand across a number of major markets.  The utility market more than doubled year-over-year, with 24 utility PV projects completed in Q1 2013.

Cumulative operating PV capacity in the United States now stands at 7.9 gigawatts (GW), with more to come by year-end. “Looking at the market on the whole, the researchers forecast 4.4 GW of PV to be installed by December 31, growing to nearly 9.2 GW annually in 2016. GTM Research and SEIA have increased each year’s forecast marginally from past editions of the report, due largely to increasingly bullish expectations for the residential market and the near-term opportunity it offers.

Despite the fact that little concentrating solar power (CSP (News - Alert)) capacity came online during Q1 2013, CSP also is expected to make major gains by the end of the year, adding more than 900 MW of capacity. Combined, the U.S. is expected to add 5.3 GW of solar electric capacity in 2013, enough to power more than 960,000 average American homes.

“The U.S. now has more than 8,500 MW of cumulative installed solar electric capacity— enough to power more than 1.3 million American households,” said Rhone Resch, president and CEO of SEIA. “This sustained growth is enabling the solar industry to create thousands of good American jobs and to provide clean, affordable energy for more families, businesses, utilities, and the military than ever before. This growth simply would not have occurred without consistent, long-term policies that have helped to ensure a stable business environment for our nation’s 5,600 solar companies – many of them small businesses.”




Edited by Jamie Epstein


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