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New ‘U.S. Solar Market Insight’ Q2 report finds robustness among the lumpiness

The market analyst term “lumpiness” has a certain tactility to it, a suggestion of inconsistency that suits the uneven economic conditions that it describes. But just because an industrial sector might be lumpy, that doesn’t mean it’s unhealthy or in trouble. So when the team at GTM Research and SEIA who coauthored the new “U.S. Solar Market Insight” (SMI) Q2 2013 report use the expression to portray the latest domestic data set, they are quick to note that Q2s have a tendency toward lumpiness and that this year’s third- and fourth-quarter outlooks will likely be smoother. Despite a few hiccups during the period in the residential and “nonresidential” (AKA commercial/industrial) portions, the robust U.S. solar industry growth pattern remains intact: the 832MW installed in Q2 represents 15% growth over Q1 and marks the quarter as the second best on record and best second-quarter ever.

Although the executive summary (downloadable here) provides enough info for most interested parties, the Curator obtained the full SMI report and has just come up for air from a deep dive into the stats and analyses. While there is plenty to get wonky about, here is an alternative distillation of the latest SMI, with a few other mixological ingredients thrown in.

The report posits that almost 4.4GW will be installed in 2013, or about 30% more than in 2012. Another fresh forecast from Mercom Capital puts the number closer to 4.5GW, but more interestingly shows the U.S. market will come in third behind China (8.5MW) and Japan (7GW) on the global solar hit parade this year—ahead of long-time pack leaders Germany and Italy.

NPD Solarbuzz’s latest Asia-Pacific update claims that red-hot Japan joined the 10GW club in August, as in 10 gigs of installed solar-generating capacity. The island nation joins Germany, Italy, China, and yes, the U.S, in that exclusive club. Although the SMI notes that 8.858GW had been installed here by June 30, Solarbuzz makes the plausible statement that both the U.S. and China also passed 10 gigs over the past few months.

One last Japan vs. U.S. market comparison: New figures from the Japanese Photovoltaic Association purport that 1.654GW of modules were shipped there during Q2. The SMI doc says that 1.2GW flowed through the U.S. market during the same period. Both geographies shared a common thread among those millions of modules: most of them were imported from non-domestic sources.

Enough with the global evaluation, here’s some SMI-derived observations about the domestic U.S. situation.

The utility segment dominated the Q2 numbers, with 452MW of PV installed in larger-scale, non-distributed generation projects and 2.418GW expected to come online by the end of 2013. The other, non-PV piece of the utility pie, concentrated solar power, contributed exactly zero to the installation mix during the quarter, but is expected to end the year with a flourish, kicking in more than 900MW (AC) over the final two quarters. A gander at the pipeline figures for both utility-scale technologies reveals that more than 12GWs of PV projects have signed power purchase agreements (with >4GW under construction) and nearly 1.7GW of CSP plants also are PPA’ed, with most of that under construction as well. The obvious back-of-the-envelope comparison with nuclear energy generating stations is eye-opening: all those solar farms, if/once completed, will be the equivalent of somewhere in the neighborhood of 12-14 individual nuke plants.

California continues to lead the way in all segments of the U.S. market, with nearly 438MW of the national total. The Golden State is expected to account for 2.118GW of the 4.372GW to be installed over the course of the year, with Arizona, New Jersey, and Hawaii trailing far behind in the numbers game. But a look at the state-by-state forecasts through 2017 reveals an interesting trend of rapid growth in other states. Connecticut, Delaware, the District of Columbia, New York, Utah, Texas, Nevada, Georgia, Minnesota, and Missouri are among those where the projections show triple-digit percentage growth in one or more industry segment, as all of them achieve multi-megawatt status and beyond. Of course, several states come from an installed base of next to nothing, so an upward trajectory of a few megs represents phenomenal growth in a residential market.

Although the installation numbers speak volumes about the disparity among the states, nowhere is the fragmented nature of the so-called “U.S. market” more striking than in the installed price section of the SMI report. As the authors note, the pricing varies from state to state, project to project, across all three segments. While the blended, capacity-weighted average price did come down 9.3% quarter over quarter (and almost 41% since Q2 2011), the range of those prices varied wildly, from as much as $8/W on residential and nonresidential jobs to less than $3/W and ~$2/W, respectively. “Even within a single state, installed costs can vary by more than $2/W,” the authors note.

But the relative maturity of a market, its labor and soft costs, and system size all drive the pricing mechanism “In established markets, Q2 2013 average residential pricing ranged from $4.05/W to $5.70/W. Nonresidential pricing ranged from slightly more than $2.60/W to over $5.25/W,” the report says. That said, the data find Minnesota and Wisconsin at the high end of the installed price spectrum for residential and nonresidential, respectively, while Florida and New Jersey take honors on the low end of the range. The report also shows that system size plays, um, a sizeable role in determining project costs; in Q2, the weighted-average price nationally for installations <10KW was $5.21/W, while the price for 1MW+ arrays has dropped to $2.38/W.

If nothing else, that last price point underscores that scale (and yes, size) does matter. With 10GW and counting of solar now generating clean power in the U.S., what was a tiny niche market just a decade ago has become an energy source deserving of a seat at the big table.