Solar Market Insight Report 2012

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Solar Market Insight Report 2012 Q3

Report

Download the Solar Market Insight 2012 Q3 Executive Summary (https://www.slideshare.net/SEIA/us-solar-market-insight-q3-2012-executive-summary)

Distributed Solar, Power Plant Development, Renewable Energy Deployment, SolarTechnology, State Solar Policy

Purchase the full report(http://www.greentechmedia.com/research/ussmi) | Press Release(http://www.seia.org/news/new-report-3rd-quarter-us-solar-energy-growth-highlighted-pv-record-residential-installs) | Press Resources(http://www.seia.org/news/press-support/solar-market-insight-report-2012-q3-press-resources) | Fact Sheet(http://www.seia.org/research-resources/solar-industry-data)

The quarterly SEIA/GTM Research U.S. Solar Market Insight report shows the major trends in the

U.S. solar industry. Learn more about the U.S. Solar Market Insight Report (http://www.seia.org/research-

resources/us-solar-market-insight/about).

1. Introduction

Despite some manufacturing plant closures and capacity reductions, the global solar industry remains ina state of heavy oversupply as the end of 2012 approaches. PV module manufacturing capacity willstand at roughly 70 GW[1] (#_ftn1)at years end, while global demand is estimated at 31 GW. Thesemanufacturing woes have coincided with (and, to an extent, fueled) booming solar demand in the U.S.,

where domestic PV installations more than doubled in 2010 and again in 2011. In 2012, we forecast agrowth rate of 70 percent still much higher than the 14 percent rate of expected global market growth.

As the numbers throughout this report show, the U.S. solar market is still booming. Residential andcommercial installations were strong in the third quarter of 2012, and many large utility solar projectsare expected to come online in the fourth quarter. Still, the picture is not entirely rosy for alldownstream players in the U.S. A number of currently expanding markets (e.g. Massachusetts) are

headed for a downturn in 2013, while other historically booming markets (e.g. New Jersey) are midwaythrough a correction period. Successful installers, developers, and EPCs will be able to navigate thechoppy waters of these markets, but success will require a deep understanding of near-term marketdynamics and other unique requirements needed to play in each territory.

GTM Research forecasts that 3.2 GW of PV will be installed in 2012, up from 1.9 GW in 2011. Given

this growth, U.S. share of global installations will rise to over 10% from 7% in 2011 and less than 5% in2010. GTM Research also expects that at least 21 individual states will install over 10 MW of PV in2012, up from only four in 2008.

KEY FINDINGS

ar Market Insight Report 2012 Q3 | SEIA http://www.seia.org/research-resources/solar-market-insight-report-20...

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Photovoltaics (PV)

PV installations totaled 684 MW in Q3 2012, up 44% over Q3 2011[2] (#_ftn2)The residential market grew 12% over Q2 2012 and had its largest quarter in historyThe non-residential market grew 24% over Q2 2012, thanks primarily to growth in California andMassachusetts

There is now a total of 5.9 GW of PV operating in the U.S. from over 271,000 installations

We expect record installations in Q4, leading to 70% annual installation growth in 2012 on 3.2GW installed

Concentrating Solar Power (CSP and CPV)

All phases of BrightSources Ivanpah project are expected to come online in 2013Abengoas Solana Generating Station is over 75% complete and expected to be online in summer2013SolarReserve continues PPA discussions with Tri-State and Xcel for its 200 MW

acSaguache

project in ColoradoThe California Public Utilities Commission (CPUC) unanimously approved an amended PPA for

BrightSources Sonoran West project

Figure 1.1 Q3 2012 State PV Installation Rankings


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2. Photovoltaics (PV)

Photovoltaics (PV), which convert sunlight directly to electricity, continue to be the largest componentof solar market growth in the U.S.

2.1. I nstallations

The U.S. installed 684 MW in Q3 2012. This represents a 12% decline from Q2 2012 but 44% growthover Q3 2011. As always, it is important to take the utility market out of the equation when seekingmeaningful conclusions within quarterly installation figures, as the utility market is simply too volatile


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and dependent on individual projects. In this context, Q3 was quite strong, with 20% quarter-over-quarter growth in the distributed generation (DG) market. Both the residential and non-residentialmarkets grew over Q2 in more than half the states we track.

Through the first three quarters of the year, the U.S. installed a total of 1,992 MW more than the 2011annual figure. Still, in order for the market to reach the 3.2 GW we forecast for the year, the fourthquarter will have to be, relatively speaking, enormous. For context, the largest quarter in the history of

the U.S. market was Q4 2011, during which 792 MW of PV were installed. Meanwhile, our forecastcalls for 1,202 MW to be installed in the fourth quarter of this year.

FIGURE 2.1: U.S. PV Installations by Market Segment, Q1 2010 to Q3 2012

Figure 2.2 U.S. PV Installations by Market Segment, 2011-Q3 2012


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Note: Historical and forecasted installation figures by state and by market segment, as well as state-by-state market analysis, are available in the full report (http://www.greentechmedia.com/research/ussmi).

Residential PV installations continued to grow incrementally in Q3 2012. In each of the last fivequarters, residential installations have grown between 3% and 21% on a national level, which makes theresidential sector by far the most stable segment in the U.S. market. California led the way in Q3 2012with 52.4 MW installed, up from 46.4 MW in Q2 2012. Second-tier residential markets also generallyhad a strong quarter, with expansion in Arizona, Hawaii, and Colorado. The one exception was New

Jersey, where residential installations declined along with the rest of the market. Third-party ownedresidential PV systems continue to far outnumber direct purchases by homeowners in mature markets.

After a weak Q2, thenon-residential market bounced back in Q3 2012 with 24% quarterly growth.

This is particularly impressive given that New Jersey (formerly the largest non-residential market in thecountry) dropped by 24 MW in Q3. States with notable growth in Q3 included California andMassachusetts. As with other market segments, the non-residential market tends to trend upward in the

fourth quarter of each year as installers rush to complete projects within a calendar year. We expect thisto remain true in 2012, particularly in California, Arizona, and Massachusetts.

There were 21utilityprojects (or phases of projects) completed in Q3 2012 ranging in size from 300

kW to 115 MW. Most notable among these were phases of some of the largest projects in developmentAgua Caliente in Arizona and California Valley Solar Ranch in California. There are currently 2.1GWdc of utility PV projects operating in the U.S. as compared to 10 GW of projects with PPAs that arenot yet operating. Of this 10 GW, fully 3 GW comes from the ten largest projects in construction, all ofwhich will be selling power to utilities in California. The imbalance between completed and late-stage

development projects will result in significant installation growth figures in the 2012-2014. However,

new utility PPA procurement is down and developers are having a harder time finding buyers than theydid even one year ago. We expect this to have a meaningful impact on installations in 2015-2016, whichis why our forecast for the utility market shows slowing growth in the out years.

Figure 2.3 State-Level Installations, Q3 2012


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2.2. Installed Price

Figure 2.4 Average Installed Price by Market Segment, Q1 2011 Q3 2012


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Quarter-over-quarter, the national weighted-average system price rose by 3.2%, from $3.45/W to$3.56/W. Year-over-year, average installed costs declined by 19.3%. This capacity-weighted number isheavily impacted by the volume of utility-scale solar installed in a given quarter, of which there wassubstantially more installed in Q2 2012 compared to Q3 2012. Within each market segment

individually, average installed prices were down across the board. It should be noted that prices reportedin this section are weighted averages based on all systems that were completed in Q3 across alllocations.

RESIDENTIAL system prices fell 4.4% from Q2 2012 to Q3 2012, as the national

average installed price dropped from $5.45/W to $5.21/W. Year-over-year, installed costsdeclined by 15.3%. Installed prices came down in all major residential marketsCalifornia, Arizona, New Jersey, Massachusetts, and Coloradoand it was notuncommon for final installed prices to be in the $4.00/W range.

NON-RESIDENTIAL system prices fell 3.0% Q/Q, from $4.31/W to $4.18/W.

Year-over-year, installed costs declined by 14.7%. SREC states, such as New Jersey andMassachusetts, helped to drive down the overall national price. For projects in excess of100 kW, final project prices were consistently in the $2.25/W-$2.75/W range, whichleaves limited margins for developers and installers. California also experienced a

significant price decrease, helping installation figures rebound from a weak Q2 2012.UTILITY system prices once again declined Q/Q, dropping from $2.60/W in Q2 2012 to$2.40/W in Q3 2012. Year-over-year, installed prices fell by 30.4%. First Solar, which hasvery low turn-key costs, brought a large majority of new utility capacity online in Q3,


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helping to drive down the average.

2.3 Component Pricing

Pricing for polysilicon and PV components remained soft in Q3 2012 due to the persistence of theglobal oversupply environment that the industry has faced since early 2011. Blended polysilicon pricesdeclined by 15% to $22/kg. Blended module ASPs for Q3 2012 were down to $0.75/W, a staggering

43% lower than Q3 2011 levels of $1.32/W. As the International Trade Commission (ITC) has issued itsfinal decision in the antidumping (AD) and countervailing duty (CVD) investigations against Chinese

c-Si cell manufacturers, GTM Research maintains that tariffs will not have a material impact on pricingin the U.S. Many manufacturers continue to obtain U.S.-bound cells via tolling from Taiwan with anestimated cost impact of less than $0.10/W. This does not necessarily prohibit Chinese manufacturersfrom pricing modules below their domestic competitors. Coupled with the U.S. AD/CVD decision, theoutcome of the trade dispute in Europe may have a greater impact on U.S. supply than the U.S. decision

alone.

Figure 2.5 U.S. Polysilicon, Wafer, Cell, and Module Prices, Q4 2011-Q3 2012

Residential Rooftop 7.5kW 10kW sloped roof in California using a penetrating rail-basedsystemThis edition also marks the beginning of our coverage of pricing and market dynamics for PV

balance of systems, starting with PV mounting structures. Factory gate pricing for PV mountingstructures differ heavily depending on market segment, configuration, layout and project size, which cancomplicate anaverage cost. For example, manufacturers reported costs for the third quarter forcommercial systems anywhere between $0.24/W to $0.35/W. For simplicity, we note that the values


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reported below reflect the mounting structure-only costs of the following system types:

Commercial Rooftop 100 kW 500 kW flat roof ballasted system in California requiring noadditional structural supportGround Mount Fixed Tilt 1 MW 5 MW fixed tilt ground mount system in California, notincluding foundation structuresGround Mount Tracking 5 MW 10 MW one-axis tracker in California not including

foundation structures

Even with these baselines, note that PV mounting structure purchasers should consider the full impliedcost of individual manufacturers rather than relying on quotes versus the national average. Differences

in racking materials and design have different implications for labor costs, grounding requirements andadditional structural support.

Figure 2.6 U.S. Mounting Structure Pricing by End Market and Quarter, Q3 2012

2.4. Market Outlook


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This quarter we have overhauled our installation forecasts. Instead of providing three demand scenariosas we have in the past, we now focus on providing a single forecast with significantly increased detail.Specifically, we will be adding forecasts by state, by market segment, as well as including rollingquarterly forecasts all of which are available in the full report.

Historically, the fourth quarter has been by far the largest for PV installations in the U.S. In 2010 and2011, the fourth quarter represented 41% and 42% of all annual installations, respectively. We expect a

similar, albeit slightly lower, fourth quarter bump in 2012 with 1,202 MW installed, or 38% of theannual total. To be sure, much of this forecast hinges on the timely completion of a number ofutility-scale projects currently in the late stages of construction. But we do expect growth across all

market segments.

Apart from the utility sector, Q4 developments in Massachusetts and California are worth noting.Specifically, we are expecting to see 40 MW of non-residential installations in Massachusetts over thattime frame, while the California forecast calls for 60 MW in residential installations. We anticipate acontinued downturn in New Jersey and Colorado, but robust growth in Hawaii and Arizona.

Figure 2.7 PV Installation Forecast, 2010-2016E

Our overall forecast for U.S. PV market growth has largely remained steady this quarter, with 3.2 GW

expected in 2012 growing to nearly 8 GW in 2016. However, there is one significant revision within ourmarket outlook. In the out years of the forecast (2015-2016) our estimate of utility PV installations hasdecreased, while the residential and non-residential forecasts have been increased. As a result, weexpect the distributed generation sector to regain some of the market share it has been losing beginning


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in 2015, if not earlier.

Figure 2.8 PV Market Segmentation, 2008-2016E

Note: Installation forecast by state available in the full report (http://www.greentechmedia.com/research/ussmi)

3. Concentrating Solar Power

While there was no additional concentrating solar capacity installed in Q3 2012, there were significantdevelopments within the market:

All phases of BrightSources Ivanpah project are expected online in 2013

Abengoas Solana Generating Station is over 75% complete and expected online in summer 2013PPA discussions continue with Tri-State and Xcel for the 200 MWac Saguache project inColorado

The California Public Utilities Commission (CPUC) unanimously approved an amended PPA for

BrightSources Sonoran West project

Figure 3.1 Select Concentrating Solar Project Development Highlights


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PROJECT STATETECHNOLOGYCAPACITY(MWAC)

EXPECTEDCOMPLETION

PROJECT STATUS UPDATE

Solana

GeneratingStation

AZ CSP 280 2013

Installation 75% complete;

expected onlineSummer 2013

Ivanpah CA CSP 392 2013

Unit 1: Successfully aimed first 3heliostats at Unit 1 boiler; on trackto begin hydro-testing; more than49,000 pylons and heliostats

installedUnits 2 & 3: More than 63,000pylons and 26,000 helio statsinstalled

Genesis Solar

EnergyProject-1

CA CSP 125 2013

Flooding damaged 35 sections of

mirrors, creating ~$3M in damageand extended project timeline

CrescentDunes SolarEnergy Project

NV CSP 110 2013BATZ Energy selected to supplysandwich panels for heliostats

Palen Solar CA CSP 500 2014CEC approves ownership transferto BrightSource

AbengoaMojave Solar(AMS)

CA CSP 280 2014 Installation 30% complete

Saguache CO CSP 200 2015

PPA discussions with Tri-State and

Xcel, butno commitment

Rio Mesa 1 CA CSP 250 2015CPUC voted to deny cost recoveryfor SCE PPA based on price and

value comparison

Siberia 1 & 2 CA CSP 400 2016

CPUC voted to deny cost recoveryfor SCE PPA due to transmission

uncertainty and interference withnearby military training operations


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PROJECT STATETECHNOLOGYCAPACITY(MWAC)

EXPECTEDCOMPLETION

PROJECT STATUS UPDATE

Sonoran West CA CSP 200 2017CPUC unanimously approvedamended PPA

ASU CPVProject

AZ CPV 1 2012SunPower driving piers intoground

SunPower C7Project

AZ CPV 6 2013PPA with Tucson Electric Power;will begin construction in first halfof 2013; online Q4.

[1] (#_ftnref1)All capacity figures are reported in direct current (DC) unless otherwise stated

[2] (#_ftnref2)To ensure the upmost accuracy, each quarter new data is added to the U.S. Solar MarketInsight reports, thus reported

figures may not match those of previous iterations

U.S. Solar Market InsightTM is a quarterly publication of the Solar Energy Industries Association (SEIA)and GTM Research. Eachquarter, we survey nearly 200 installers, manufacturers, util ities, and state agencies to collect granular data on photovoltaic (PV) and

concentrating solar power. These data provide the backbone of this Solar Market InsightTM report, in which we identify and analyze trendsin U.S. solar demand, manufacturing, and pricing by state and market segment. We also use this analysis to look forward and forecast

demand over the next five years. As the U.S. solar market expands, we hope that Solar Market InsightTM will provide an invaluabledecision-making tool for installers, suppliers, investors, policymakers and advocates alike.

* References, data, charts or analysis from this Executive Summary should be attributed to the SEIA/GTM Research U.S. SolarMarket Insight.

* Media inquiries should be directed to Nick Rinaldi ([email protected](mailto:[email protected])) at GTM Researchor to Monique Hanis ([email protected] (mailto:[email protected]) ) or Jamie Nolan ([email protected](mailto:[email protected]) ) atSEIA.

* All figures sourced are from GTM Research. For more detail on methodology and sources, visit www.gtmresearch.com/solarinsight

(http://www.gtmresearch.com/solarinsight) .

AUTHORS

GTM Research Solar Analysts:

Shayle Kann, Vice President, ResearchShyam Mehta, Senior AnalystMJ Shiao, Senior AnalystAndrew Krulewitz, Solar AnalystCarolyn Campbell, Solar AnalystScott Burger, Solar AnalystNicole Litvak, Research Associate

SEIA Policy and Research Division:

Tom Kimbis, Vice President, Strategy and External AffairsJustin Baca, Senior Research Manager


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Solar Energy Industries Association

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Will Lent, Research & Policy AnalystShawn Rumery, Research Associate

Market Research/Policy or Economic Analysis

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Solar Energy Industries Association


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Solar Market Insight Report 2012