March 14, 2012

New Solar Panels Blossomed Despite a Tough Year for the Industry

NY Times, Diane Cardwell

Original News Source >

Last year seemed like a dark one for the solar industry: stiff competition from China drove American manufacturers to layoffs and even bankruptcy, while the low price of natural gas and the loss of a critical government subsidy weakened incentives for new solar developments. And then there was the long shadow of Solyndra, whose bankruptcy after receiving federal loans cast a pall over other green-energy endeavors.

And yet, by the numbers, 2011 was a banner year for all those sparkling blue modules, according to a report published on Wednesday by the Solar Energy Industries Association and GTM Research. About 1,855 megawatts of new photovoltaic capacity was installed, more than double the 887 megawatts of the year before. The number of large-scale installations grew as well, to 28 from just 2 in 2009.

Globally, the United States represents only 7 percent of all photovoltaic capacity, the report found, but that’s up from 5 percent in 2010.

“We went from an industry that was installing megawatts a year to an industry that’s installing gigawatts,” said Rhone Resch, president and chief executive officer of the solar energy association. “If we can attract the investment, the opportunity to grow is really limitless simply because demand for energy, and clean energy, is just so great.”

The robust expansion of solar energy resulted from a number of factors, according to the report, “U.S. Solar Market Insight: Year-in-Review 2011.”

System prices fell 20 percent because of cheaper components (the average price of a panel dropped 50 percent), more options for financing, better installation methods and the shift to larger arrays. In addition, with the expiration of the Treasury Department’s 1603 tax grant program, many developers rushed to get their projects going before the end of the year. That program allowed renewable energy companies to get 30 percent of the cost of a new project back as a cash grant once construction was completed rather than spreading the benefit over a period of years.

California still led the nation, installing 542 megawatts of solar. But the No. 2 overall market, New Jersey with 313 megawatts, installed the most solar energy in commercial projects of any state: about 227 megawatts to California’s 195.

The momentum of solar may prove tricky to sustain. Lobbying efforts to revive the 1603 program have thus far proved unsuccessful. An amendment sponsored by Senator Debbie Stabenow, Democrat of Michigan, that would have brought back the grant program and extended a tax credit favored by the wind industry failed to pass on Tuesday. And at the state level, some lawmakers have been looking to roll back renewable energy mandates.

“The markets really exist for solar as an interplay between federal and state policy,” Mr. Resch said. “And if states start to retreat from expanding their markets or creating an open market environment, it will be difficult for solar to grow.”