US Solar Expecting Strong Growth

Despite a challenging domestic economic environment, the US solar market grew 36% in 2009, according to the United States PV Market 2010 from Solarbuzz, part of the NPD Group. This growth was, however, not nearly as strong as the region's 62% growth in 2008. On a global scale, the country was ranked the third largest solar photovoltaic market, behind Germany and Italy.

"2009 marked a year of transformation for the US solar market," noted Craig Stevens, President of Solarbuzz. "Changes in the roles of utility companies, new market entrants, lower cost PV modules from Asia and new direct-to-market approaches became more prevalent. As a result, solar companies doing business in the States will need to adapt quickly to these challenges while also being responsive to frequent adjustments in the fragmented incentive and regulatory environment."

California continues to play a critical lead as the base load state market for the US. The state accounted for 53% of US PV on-grid installations, and is expected to maintain its strong position in 2010. Despite a slowdown in demand from the corporate sector across the U.S., government, residential and utility growth more than offset this effect. Price cuts in residential installations provided the foundation for steady growth across the country. A wide range of start-up markets in other states are well underway as new PV incentives were launched. While there are utility barriers to be resolved, including regulatory restrictions on the use of Power Purchase Agreements (PPAs), the central policy thrust over the past 12 months remains positive. Sixteen states and Washington D.C. have enacted a Renewable Portfolio Standard with solar or DG set-asides to promote PV. Fulfillment of solar set-aside obligations drove around 30% of total on-grid PV installations in 2009.

The large number of state policy initiatives has created a fragmented regulations and incentive environment. Regardless, states are doing their job of stimulating local markets. The dispersed funding sources mean the U.S. market does not does not carry the same level of risk compared to countries driven by a single national policy. Nonetheless, Federal incentives are playing a much larger role in stimulating demand over the next two years.

The systems division of SunPower was the leading company in terms of PV installed for the year. In California, Chevron Energy and SPG Solar performed strongly in 2009 and moved up to the #2 position. Among residential installers in California, REC Solar, SolarCity and Real Goods Solar led the field.
Within the next five years, Solarbuzz forecasts the market will grow to between 4.5-5.5 GW depending on the scenario. This is around ten times the size of the 2009 market, an average annual growth rate of 30% per annum. The key drivers of this outcome will be much more aggressive positioning in the utility segment based on the need to meet their Renewable Portfolio Standard obligations, the development of new state markets together with the return of the corporate segment and steady growth in residential demand stimulated by cuts in end-market pricing. The US order book for photovoltaic systems currently stands at 12 GW. This represents the total of solar set-aside RPS', projections of demand from multi-year funded incentive programs, stimulus funded projects and other large utility identified projects

Figure 1: US PV Order Book (2010-2014)

Source: Solarbuzz