us solar market insight report q3 2012

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U.S.SOLAR MARKET INSIGHTREPORT | Q3 2012 | EXECUTIVE SUMMARY

U.S. Solar Market InsightTM Introduction

© Copyright 2012, SEIA/GTM Research │ 2

1. Introduction

Despite some manufacturing plant closures and capacity reductions, the global solar industry

remains in a state of heavy oversupply as the end of 2012 approaches. PV module manufacturing

capacity will stand at roughly 70 GW1 at year’s end, while global demand is estimated at 31 GW.

These manufacturing 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 a growth 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

and commercial installations were strong in the third quarter of 2012, and many large utility solar

projects are expected to come online in the fourth quarter. Still, the picture is not entirely rosy for

all downstream 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 midway through a correction period. Successful installers, developers, and EPCs

will be able to navigate the choppy waters of these markets, but success will require a deep

understanding of near-term market dynamics 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% in 2010. GTM Research also expects that at least 21 individual states will install

over 10 MW of PV in 2012, up from only four in 2008.

1 All capacity figures are reported in direct current (DC) unless otherwise stated



KEY FINDINGS

Photovoltaics (PV)

PV installations totaled 684 MW in Q3 2012, up 44% over Q3 20112

The residential market grew 12% over Q2 2012 and had its largest quarter in history

The non-residential market grew 24% over Q2 2012, thanks primarily to growth in California

and Massachusetts

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 3.2

GW installed

Concentrating Solar Power (CSP and CPV)

All phases of BrightSource’s Ivanpah project are expected to come online in 2013

Abengoa’s Solana Generating Station is over 75% complete and expected to be online in

summer 2013

SolarReserve continues PPA discussions with Tri-State and Xcel for its 200 MWac Saguache

project in Colorado

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

for BrightSource’s Sonoran West project

2 To ensure the upmost accuracy, each quarter new data is added to the U.S. Solar Market Insight 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. Each quarter, we survey nearly 200 installers,

manufacturers, utilities, 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 trends in 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 invaluable decision-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.

Solar

Market Insight.

* Media inquiries should be directed to Nick Rinaldi ([email protected]) at GTM Research or to Monique Hanis

([email protected])

or Jamie Nolan ([email protected]) at SEIA.

* All figures sourced are from GTM Research. For more detail on methodology and sources, visit

www.gtmresearch.com/solarinsight.



AUTHORS

GTM Research Solar Analysts:

Shayle Kann, Vice President, Research

Shyam Mehta, Senior Analyst

MJ Shiao, Senior Analyst

Andrew Krulewitz, Solar Analyst

Carolyn Campbell, Solar Analyst

Scott Burger, Solar Analyst

Nicole Litvak, Research Associate

SEIA Policy and Research Division:

Tom Kimbis, Vice President, Strategy and External Affairs

Justin Baca, Senior Research Manager

Will Lent, Research & Policy Analyst

Shawn Rumery, Research Associate



Figure 1.1 Q3 2012 State PV Installation Rankings

Rank

(Q2 2012)

Rank

(Q3 2012)

State Installations,

Q2 2012

Installations,

Q3 2012

1 1 California 222 194

2 2 Arizona 192 192

3 3 New Jersey 103 69

6 4 Massachusetts

Underlying Data Available

in the Full Report

4 5 Nevada

14 6 Maryland

5 7 Texas

8 8 North Carolina

9 9 Hawaii

15 10 Pennsylvania

13 11 Colorado

11 12 New York

19 13 Florida

16 14 Oregon

18 15 Ohio

7 16 Illinois

26 17 Vermont

20 18 Missouri

22 19 Connecticut

10 20 New Mexico

21 21 Washington

12 22 Tennessee

17 23 Georgia

23 24 Delaware

25 25 Washington DC

24 26 Wisconsin

Total 775 684

U.S. Solar Market InsightTM Photovoltaics (PV)


2. Photovoltaics (PV) Photovoltaics (PV), which convert sunlight directly to electricity, continue to be the largest

component of solar market growth in the U.S.

2.1. Installations

The U.S. installed 684 MW in Q3 2012. This represents a 12% decline from Q2 2012 but 44%

growth over Q3 2011. As always, it is important to take the utility market out of the equation

when seeking meaningful conclusions within quarterly installation figures, as the utility market is

simply too volatile 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-residential markets 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 2011 annual figure. Still, in order for the market to reach the 3.2 GW we forecast for the year,

the fourth quarter 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 forecast calls 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-Q3 2012

141.8

179.6 178.6

348.5

277.7

341.4

474.7

793.1

533.3

775.1

684.0

0

100

200

300

400

500

600

700

800

900

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Inst

alla

tions

(MW

dc)

Residential Non-Residential Utility



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

Residential PV installations continued to grow incrementally in Q3 2012. In each of the last five

quarters, residential installations have grown between 3% and 21% on a national level, which

makes the residential sector by far the most stable segment in the U.S. market. California led the

way in Q3 2012 with 52.4 MW installed, up from 46.4 MW in Q2 2012. Second-tier residential

markets also generally had 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 owned residential PV systems continue to far outnumber direct purchases

by homeowners in mature markets.

After a weak Q2, the non-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 the country) dropped by 24 MW in Q3. States with notable growth in Q3

included California and Massachusetts. 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 this to remain true in 2012, particularly in California,

Arizona, and Massachusetts.

0

50

100

150

200

250

300

350

400

450

500


Inst

alla

tions

(MW

dc)

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

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



There were 21 utility projects (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

development – Agua Caliente in Arizona and California Valley Solar Ranch in California. There

are currently 2.1 GWdc of utility PV projects operating in the U.S. as compared to 10 GW of

projects with PPAs that are not yet operating. Of this 10 GW, fully 3 GW comes from the ten

largest projects in construction, all of which 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 they did even one year ago. We expect

this to have a meaningful impact on installations in 2015-2016, which is why our forecast for the

utility market shows slowing growth in the out years.



Figure 2.3 State-Level Installations, Q3 2012



2.2. Installed Price

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

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 is heavily impacted by the volume of utility-scale solar installed in a given quarter, of

which there was substantially 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 reported in this section are weighted averages based on all systems that were

completed in Q3 across all locations.

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

costs declined by 15.3%. Installed prices came down in all major residential markets—

California, Arizona, New Jersey, Massachusetts, and Colorado—and it was not

uncommon for final installed prices to be in

the $4.00/W range.

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

Residential Non-Residential Utility Blended

Inst

alle

d P

rice

($/W

dc)

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Q3 Price 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 and

Massachusetts, helped to drive down the overall national price. For projects in excess of

100 kW, final project prices were consistently in the $2.25/W-$2.75/W range, which

leaves 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 has very low turn-key costs, brought a large majority of new utility capacity

online in Q3, 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 the

global oversupply environment that the industry has faced since early 2011. Blended polysilicon

prices declined 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 its final 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 pricing in the U.S. Many manufacturers continue to obtain U.S.-

bound cells via tolling from Taiwan with an estimated cost impact of less than $0.10/W. This

does not necessarily prohibit Chinese manufacturers from pricing modules below their domestic

competitors. Coupled with the U.S. AD/CVD decision, the outcome 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

This 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 mounting

structures differ heavily depending on market segment, configuration, layout and project size,

which can complicate an “average” cost. For example, manufacturers reported costs for the third

quarter for commercial systems anywhere between $0.24/W to $0.35/W. For simplicity, we note

that the values reported below reflect the mounting structure-only costs of the following system

types:

Residential Rooftop – 7.5kW – 10kW sloped roof in California using a penetrating rail-

based system

Commercial Rooftop – 100 kW – 500 kW flat roof ballasted system in California requiring

no additional structural support

Ground Mount Fixed Tilt – 1 MW – 5 MW fixed tilt ground mount system in California,

not including foundation structures

Ground Mount Tracking – 5 MW – 10 MW one-axis tracker in California not including

foundation structures

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

Polysilicon P

rice ($/kg)

Com

pone

nt P

rice

($/W

)

Polysilicon Wafer Cell Module



Even with these baselines, note that PV mounting structure purchasers should consider the full

implied cost 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 and additional structural support.

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

Q3 2012

Residential Rooftop $0.43

Commercial Rooftop $0.32

Ground Mount Fixed Tilt $0.18

Ground Mount Tracking $0.24

2.4. Market Outlook

This quarter we have overhauled our installation forecasts. Instead of providing three demand

scenarios as 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 rolling quarterly forecasts – all of which are available in the full report.

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

$0.40

$0.45

$0.50

Residential Rooftop Commercial Rooftop Ground Mount Fixed Tilt Ground Mount Tracking

$/W

dc



Historically, the fourth quarter has been by far the largest for PV installations in the U.S. In 2010

and 2011, 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 the annual total. To be sure, much of this forecast hinges on the timely completion of a

number of utility-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 that time frame, while the California forecast calls for 60 MW in residential installations.

We anticipate a continued 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 our market outlook. In the out years of the forecast (2015-2016) our estimate of

utility PV installations has decreased, while the residential and non-residential forecasts have

been increased. As a result, we expect the distributed generation sector to regain some of the

market share it has been losing beginning in 2015, if not earlier.

848

1,884

3,194

3,980

5,380

6,537

7,848

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2010 2011 2012E 2013E 2014E 2015E 2016E

Inst

alle

d C

apaci

ty (

MW

)




Figure 2.8 PV Market Segmentation, 2008-2016E

Note: Installation forecast by state available in the full report

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E

Inst

alle

d C

apaci

ty (

MW

)


U.S. Solar Market InsightTM Concentrating Solar Power


3. Concentrating Solar Power While there was no additional concentrating solar capacity installed in Q3 2012, there were

significant developments within the market:

All phases of BrightSource’s Ivanpah project are expected to come online in 2013

Abengoa’s Solana Generating Station is over 75% complete and expected online in

summer 2013

PPA discussions continue with Tri-State and Xcel for the 200 MWac Saguache project

in Colorado

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

PPA for BrightSource’s Sonoran West project

Figure 3.1 Select Concentrating Solar Project Development Highlights

Project State Technology Capacity

(MWac)

Expected

Completion

Project Status Update

Solana Generating

Station

AZ CSP 280 2013 Installation 75% complete; expected online

Summer 2013

Ivanpah CA CSP 392 2013 Unit 1: Successfully aimed first 3 heliostats at Unit

1 boiler; on track to begin hydro-testing; more than

49,000 pylons and heliostats installed

Units 2 & 3: More than 63,000 pylons and 26,000

helio stats installed

Genesis Solar

Energy Project-1

CA CSP 125 2013 Flooding damaged 35 sections of mirrors, creating

~$3M in damage and extended project timeline

Crescent Dunes

Solar Energy

Project

NV CSP 110 2013 BATZ Energy selected to supply sandwich panels

for heliostats

Palen Solar CA CSP 500 2014 CEC approves ownership transfer to BrightSource

Abengoa Mojave

Solar (AMS)

CA CSP 280 2014 Installation 30% complete

Saguache CO CSP 200 2015 PPA discussions with Tri-State and Xcel, but

no commitment

Rio Mesa 1 CA CSP 250 2015 CPUC voted to deny cost recovery for SCE PPA

based on price and value comparison

Siberia 1 & 2 CA CSP 400 2016 CPUC voted to deny cost recovery for SCE PPA

due to transmission uncertainty and interference

with nearby military training operations

Sonoran West CA CSP 200 2017 CPUC unanimously approved amended PPA

ASU CPV Project AZ CPV 1 2012 SunPower driving piers into ground

SunPower C7

Project

AZ CPV 6 2013 PPA with Tucson Electric Power; will begin

construction in first half of 2013; online Q4.

SEIA® and GTM Research Deliver the Most Comprehensive U.S. Solar Market Analysis and Industry Data Available Today.

U.S. Solar Market Insight™ brings high-quality, solar-

specifi c analysis and forecasts to industry professionals

in the form of quarterly and annual reports.

These reports present market conditions, opportunities

and outlooks for the photovoltaics (PV) and concentrating

solar power (CSP) markets in the U.S. Primary data for the

reports is collected directly from installers, manufacturers,

state agencies and utilities. That data is analyzed to provide

comprehensive upstream and downstream analysis on

installations, costs, manufacturing, and market projections.

U.S. Solar Market Insight™ is offered quarterly in two

versions– Executive Summary and Full Report. The Executive

Summary is free, and the Full Report is available individually

each quarter or as part of an annual subscription.

Please fi nd a more detailed content and pricing matrix on the reverse side of this page.

› National aggregate capacity additions

› National aggregate number of installations

› National weighted average installed price

› National aggregate manufacturing production

FREE

EXECUTIVE SUMMARY

› Installations by market segment for the top 20 states

› Installed cost by market segment for each state

› State-by-state market analysis

› Component pricing across the value chain

› Manufacturing capacity & production by component by state

› Demand projections to 2016 by technology, market segment & state

FULL REPORT

For more informationon U.S. Solar Market InsightTM and to download

this quarter’s free Executive Summary, visit

www.gtmresearch.com/solarinsight OR

www.seia.org/cs/research/solarinsight

PA 10%

CA 40%

NM 5%

MA 5%

AZ 15%

3.92.43.6

TEXAS

19.831.6

16.5

PENNSYLVANIA5.7

3.64.6

NEW YORK

41.675.7

64.6

NEW JERSEY

22.126.0

38.3

ARIZONA

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Installations + Market AnalysisBy Market SegmentBy State By Ownership Structure

Installed PriceManufacturing

Polysilicon WafersCellsModulesInverters

Component Pricing Polysilicon, Wafers, Cells and Modules Inverters

Demand ProjectionsBy Market SegmentBy State

PHOTOVOLTAICS (PV)

Installations + Market Analysis Installed Price Manufacturing ProductionDemand Projections

CONCENTRATING SOLAR POWER (CSP)

TABLE OF CONTENTS

WHO BUYS US SOLAR MARKET INSIGHT?

Component Manufacturers

Project Developers

System Integrators

Investors

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Utilities

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solar market insightreport

market segment

global solar industryremains

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booming solar demandin

research forecasts

gw of pv