North America's solar PV market in 2012: Growth and uncertainty
Solar photovoltaic installations in North America surged in the fourth quarter last year thanks to a mix of falling market prices and the effect of regional and national policies such as the expiration of the 1603 Treasury Grant Program in the U.S., according to the latest report by NPD Solarbuzz. Overall, nearly a gigawatt of solar installations was added in the fourth quarter; and 59 percent of those installations were large-scale ground-mount systems.
Keep in mind, Solarbuzz defines installations as modules that have arrived at the end project site, not connection to the grid. Which means Solarbuzz's numbers may not jibe with others industry reports.
A handful of states and provinces were largely responsible for the uptick in solar installations. New Jersey, California, Arizona and Ontario -- all areas with incentives or policies that encourage solar installations -- accounted for two-thirds of the fourth quarter demand, according to the Solarbuzz report. For example, the California Solar Initiative, the largest ratepayer funded program in the U.S., received $200 million in additional funds. That money allowed the state to address a long waiting list for customer-side distributed generation.
Some incentives, namely the expiring 1603 federal cash grant program, created an unbalanced, volatile level of demand. Project activity accelerated as developers scrambled to qualify for the year-end deadline. The expiring cash grant will continue to have an impact on the market this year and is considered a key uncertainty to growth this year, according to Junko Movellan, an NPD Solarbuzz senior analyst. Other factors that will impact growth in the U.S. include approval timetables for large utility-scale projects and the market impact of states that have met their Renewable Portfolio Standard targets. The outcome of the Chinese solar trade dispute is expected to shape the market in the second half of 2012.
Market conditions in 2012
According to Solarbuzz, U.S. demand growth will be partially supported by a 25 gigawatt non-residential and utility project pipeline. This includes projects that qualified for the cash grant, which means they can only ship and be installed this year and that are toward state RPS requirements.
Residential solar installations is forecast to grow modestly. If you'll notice the graphic above, Solarbuzz has forecast a small percentage of residential installations in the first quarter compared to the same period last year. Again, the precipitous drop in cost will help drive demand as well as lease financing programs. There will be limits to that growth. An oversupply of Solar Renewable Energy Credits in New Jersey could threaten growth there.
All of this is expected to spur restructuring in downstream channels. Larger downstream companies will exit residential as it fragments into small state-specific markets. Meanwhile, new project developers will all head into the utility-scale market to tap that 25 GW pipeline.
Photo: Brookhaven National Laboratory
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This post was originally published on Smartplanet.com