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US solar boom puts Solyndra shambles in context

26 Sep 2011

As Solyndra execs stonewall Congress, the Solar Energy Industries Association reports that PV installations in the US will double this year.

The US now has 2.7 GW of peak photovoltaic capacity connected to the grid, and 2011 will see market growth of close to 100% (measured in watts installed), according to a new report published by the Solar Energy Industries Association (SEIA) in collaboration with analysts at GreenTech Media (GTM) Research.

Although the report’s findings might not be quite sufficient to put the recent stonewalling performances of Solyndra executives completely in the shade, they do at least demonstrate that, overall, the PV industry is growing fast in the US, and that one company’s bankruptcy is not representative of the wider picture.

“It would be a big mistake to characterize the entire industry in terms of what happened at Solyndra,” said SEIA president Rhone Resch in a press conference to highlight the report’s release. “We want to find out what went on, [but it is] critical that we don’t overreact as a country.”

The report clearly shows that installations are growing fast, and that the US market for PV is on its way to becoming the largest in the world. In the second quarter of 2011, the country installed 314 MW of PV capacity, up 17% from 268 MW in the first quarter of the year and up 69% from 187 MW in the second quarter of 2010. And that rate of installations is expected to accelerate in the remainder of the year – GTM Research’s Shayle Kann reckons that 2011 will see close to 1.8 GW installed overall in 2011, a figure that would represent close to 100% annual growth for the second year running.

Commercial drive
At the moment, that growth is being driven by commercial- and utility-scale projects rather than residential installations – the latter remaining somewhat subdued, although the dramatic reduction in the cost of panels this year is only just beginning to filter through to that part of the market.

Recent high-profile commercial solar projects completed in the US include a 2 MW installation by NRG Energy at FedexField, home to the Washington Redskins football team, and a 5.4 MW rooftop project at the Toys “R” Us distribution center in Flanders, New Jersey, developed by Constellation Energy. Other major retailers such as Walgreens and Best Buy are also taking advantage of the tax credits on offer for investing in the technology. Overall, commercial installations grew 22% sequentially and represent the largest single sector in the US market just over 200 MW in Q2, compared with around 50 MW for both residential and utility.

One notable aspect of the US market is that it is becoming far less reliant on California than in previous years. In fact, in the latest quarter New Jersey bumped California from its long-held position as the leading commercial market in the US. Commercial projects in New Jersey made up the vast majority of the state’s 75.7 MW installations in Q2. California remains the largest installer overall, by virtue of its more extensive residential and utility-scale projects, installing a total capacity of 94 MW in Q2, down from 111.9 MW in Q1. But whereas five years ago the state was accounting for some 80% of US activity, that figure has now dropped to about 30%.

Utility projects
On the utility side, the largest single installation completed in the second quarter was the 11.2 MW Dover SUN Park project in Delaware, and utility installations grew 37% sequentially to just below 50 MW as this sector of the market benefited from the sharp declines in module prices seen in the first half of 2011.

Although utility installations represent the smallest of the three sectors at the moment, the US is leading the world in terms of the development of extremely large PV power plants. Kann is expecting substantial growth in the second half of the year, and has identified some 700 MW currently under construction. Looking longer-term, the analyst sees a pipeline of 10 GW extending out over the next 4-5 years, based on projects announced.

While US solar is on track for a banner year overall, Kann and Resch say that the market does face a number of potential challenges in 2012 and beyond that could stunt the type of growth seen over the past 18 months – and one key political uncertainty:

"The potential expiration of the 1603 Treasury program, along with current malaise in major markets such as New Jersey and Pennsylvania, threatens to slow growth in 2012," Kann said. "Still, with increasing market diversity and the continued emergence of the utility-scale solar market, we anticipate that the US market share of global installations will triple over the next four years."

Ensuring a stable business environment remains the key to attracting investment – for both PV project financing and establishment of new manufacturing facilities – and SEIA is busy trying to educate Congress and the public at large that the fiasco at Solyndra is an isolated case in an industry that is otherwise growing fast and providing large numbers of jobs in the US.

Stonewalling
Speaking prior to the stonewalling performance by Solyndra’s CEO Brian Harrison and CTO Bill Stover as they invoked the Fifth Amendment in response to questions from Congress on September 23, Resch said: “What happened at Solyndra is disappointing to all of us,” adding that the principal reason for the bankruptcy was the company’s inability to compete with the 40% drop in the price of crystalline silicon modules seen this year.

Solyndra’s business case would have been largely predicated on the expectation that polysilicon prices would remain relatively high – as they had been in 2008 – because of constraints on supply and continuous strong demand in the market. What wasn’t predicted was the sudden evaporation of the Spanish PV market in 2009, some huge increases in silicon capacity, and the glut of c-Si modules that resulted from uncertainty in the two leading markets of Germany and Italy in early 2011.

There is a risk of political overreaction to the Solyndra affair, and both Resch and Kann stress the need to continue making the US an attractive place for manufacturers – both domestic and foreign – to invest in facilities. They note 51 existing PV manufacturing plants across the country, with domestic companies typically working on more innovative, proprietary technologies. As seen with Solyndra, that inevitably carries some risk, but many early-stage US manufacturers are also attracting investment - most recently the thin-film CIGS company HelioVolt.

And while continued price declines will inevitably present the risk of more individual bankruptcies, ultimately the result will be customers able to buy cheaper panels, a much-reduced reliance on subsidies, and market success for those manufacturers that can deliver competitive PV products based on innovative, reliable technology.

Solyndra executives in Congress:

About the Author

Mike Hatcher is the Editor of optics.org

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