Report: Utility-scale PV installations keep US market booming in Q2 2012

• The report noted that there was 3.4GW of PV utility projects under construction, which would lead to around 1.1GW of this pipeline coming on-stream before the end of the year
• California proved to be the largest installer with 217MW installed, driven by both utility-scale projects and residential, notably due to the continued strong demand for third-party financing options.

A new report from GTM Research and the US-based Solar Energy Industries Association (SEIA) could set the tone on the eve of the largest solar industry event in the US, Solar Power International 2012. After detailing that the US PV market was booming in the first quarter of the year, the latest report shows that installations reached 742MW in the second quarter, up 45% over the prior quarter, a 116% increase over the period a year ago. The quarter was dominated by utility-scale project installs which accounted for 447MW. Full-year forecast for PV installations was said to be 3.2GW, up 71% on record levels set in 2011.

“The U.S. solar industry is rapidly growing and creating jobs across America despite the slow economic recovery,” commented Rhone Resch, president and CEO of SEIA. “More solar was installed in the U.S. this quarter than in all of 2009, led for the first time by record-setting utility-scale projects. With costs continuing to come down, solar is affordable today for more homes, businesses, utilities, and the military. Smart, consistent, long-term policy is driving the innovation and investment that’s making solar a larger share of our overall energy mix.”

US residential market dynamics

Once again, California proved to be the largest installer with 217MW installed, driven by both utility-scale projects and residential, notably due to the continued strong demand for third-party financing options. Indeed, the report noted that over 70% of residential installations in California, Arizona, and Colorado used third-party ownership models to install PV systems in the second quarter.

“We’re starting to see innovative PV business models take a substantial hold in the US residential market,” said Shayle Kann, Vice President of Research at GTM Research. “The success of third-party residential solar providers has attracted more than $600 million in new investments in recent months. This influx of cash into the residential space signifies the growing acceptance of solar leases and power purchase agreements as a secure investment for project investors. We expect that third-party installations will claim even more market share in the coming quarters.”

The report noted that for fourth consecutive quarter, the US residential solar market grew incrementally, installing 98.2MW. California, Arizona, and New Jersey continued to led residential installations, though smaller-market states of Hawaii, Massachusetts, and Maryland showed strong quarter-over-quarter growth.

The ‘U.S. Solar Market Insight: 2nd Quarter 2012’ found that the California market, saw the average installed price of a third-party-owned system actually decline for the first time.

There has been criticism of this business model, chiefly due to the overall system costs being much higher than straight-forward non-leased system installs. The report noted that it cost US$5.64 per watt for third-party installed systems compared to US$5.84 per watt for directly-owned solar systems.

Shayle Kann, Vice President of Research at GTM Research told PV-Tech that the surprise decline in third-party system pricing was partly due to “the price of these systems coming in line with direct-owned systems, which implies that they've eked some cost reductions out of the customer acquisition and financing side of things.”

US utility-scale pipeline

However, it was the PV utility market that retained the most momentum in the second quarter. The report cited that 8-US states (California, Arizona, Nevada, Texas, Illinois, North Carolina, New Mexico, and New Jersey), had utility-scale project installations over 10MW in the quarter.

The report noted that there was 3.4GW of PV utility projects under construction, which would lead to around 1.1GW of this pipeline coming on-stream before the end of the year, keeping-up momentum over the next 2-quarters. The competitive market conditions have also supported weighted US average system prices falling 10% quarter-on-quarter.

According to Kann, a rush to complete utility-scale PV projects is expected in the fourth quarter, especially in the Southwest region of the country, which is less impacted by seasonal weather conditions.