After the rapid expansion of the U.S. PV market in the last few years, the U.S. solar industry is likely heading for a period of slower growth. Our recent analysis of the PV market in each of the 50 U.S. states shows that contrary to many hopes the U.S. market will not be able to provide immediate respite to all those manufacturers that are suffering from the current over-capacity and margin squeeze.
Our most recent U.S. PV Market Forecast shows that installed capacity will grow seven percent to 1,628 MW in 2012. Given falling equipment prices, the slow growth means that overall market value for 2012 will be flat or drop when compared to 2011.
Developers in the U.S. market will continue to reap benefits as overcapacity in the solar supply chain will see the cut-throat competition continue, with average selling prices for modules continuing to fall for at least the first part of 2012.
While the slower growth ahead might be a disappointment to less-competitive equipment suppliers, it is not all doom and gloom as pockets of opportunities can be found for those with a smart and flexible market approach. For the most part, these growth opportunities are starting to emerge in states with strong solar policy support.
One such example is Maryland, a small state with a solar carve-out that will drive cumulative growth of close to 80 percent between now and 2015. Players looking to capitalize on these opportunities must begin to look at their sales and marketing approach outside Florida and New Jersey. As the nature of the market changes, only those with the ability to calibrate their channel strategy to match the market opportunity have a chance of succeeding.
In terms of the overall market opportunity, the West will remain the largest regional market for the foreseeable future and Florida and New Jersey will be the single most important states for some time to come, even if both states will face intermittent market disruption.
Longer-term, from about 2014, we expect to see the beginning of a period with stronger and sustained growth take place, partly because the lower cost of solar equipment will make solar a cost competitive source of energy in certain parts of the U.S. (assuming the federal ITC continues). Even in those cases, a targeted approach is required in order to maximize the opportunity.
Increasingly, the U.S. PV market will be dominated by utility scale PV projects because that is the way utilities and IPPs most often choose to meet the RPS targets.
ClearSky Advisors U.S. PV Market Forecast is based on the development on a number of market scenarios. The numbers referred in this article stem from our “Expected Case” scenario, which — among other factors — assumes that the cash grant will be discontinued from the end of 2011.