U.S. Solar Energy Industry Sets Record for Installations

The section 1603 cash grant program for renewable energy generation will expire on December 31st, 2011, as a final deal on taxation brokered between the opposition Republican Party and U.S. President Barack Obama did not contain an extension of the program.

For nearly three years the program, also known as the Treasury Grant Program (TGP), has supported a vast number of solar photovoltaic (PV) and concentrated solar power (CSP) projects across the United States. The Solar Energy Industries Association (SEIA, Washington D.C., U.S.) has repeatedly described the TGP as the most important policy for the U.S. solar industry.

"The 1603 Treasury Grant Program, also called cash grant, is a very effective program," EuPD Research CEO Markus Hoehner told Solar Server in an interview at the Solar Power International trade show in October 2011. "It allows investors a direct injection of 25-30% of the investment cost, and they get that a very short time after connecting to the grid."

"So of course this is bringing down the effective investment cost. From a calculatory point of view, it is very good when you look at that levelized cost of electricity-wise to compete. PV becomes more competitive in comparison to other renewable energies." 

The program was created as a result of the American Recovery and Reinvestment Act of 2009 ("stimulus act") which President Barack Obama signed into law on February 17th, 2009. The provision was originally set to expire on December 31st, 2010, however in late December 2010, a one-year extension was secured after an intensive lobbying process.

This approach has not yet worked this year, though SEIA’s lobbying efforts at the U.S. congress continued, in the hopes that the TGP can be resurrected during the reconciling of the budget deal. National environmental organizations including the Sierra Club (San Francisco, California, U.S.) and the National Resources Defense Council (Washington D.C., U.S.) had signed onto a SEIA letter petitioning congressional leaders to extend the program.

The U.S. solar energy industry achieved a new record for installations and growth in the third quarter of 2011 thanks to utility-scale project completions, a strong residential market, effective policies and the plummeting price of solar panels, according to a report released today by GTM Research and the Solar Energy Industries Association (SEIA).

Through the third quarter of 2011, the U.S. solar market has installed more than 1,000 megawatts (MW) of solar capacity on the year, already surpassing the 2010 annual total of 887 MW, according to the U.S. Solar Market Insight: 3rd Quarter 2011 report. This includes 449 MW installed in the third quarter alone – a record for quarterly installations and more new solar electric capacity than was added in all of 2009. This also represents 140 percent growth over the same quarter last year.

Much of this growth is due to the Department of Treasury’s 1603 program, which is set to expire on Dec. 31 unless Congress extends it. In the absence of an extension of the program, the report predicts that there will be a tax equity bottleneck for projects in 2012, leading to a possible slowdown in installations in late 2012 and into 2013.

"The U.S. solar industry is on a roll, with unprecedented growth in 2011," said Rhone Resch, President and CEO of SEIA. "Solar is now an economic force in dozens of states, creating jobs across America. But our industry needs stable policy on which to make business decisions, and unfortunately an underlying mechanism for financing solar projects is scheduled to expire on December 31. To keep the industry growing and creating jobs in the U.S. we need Congress to extend the 1603 program. The 1603 program has done more to expand the use of renewable energy than any other policy in U.S. history. Our country is not in a position to have Congress turn their back on American industries, and it is critical that Congress extend the 1603 program in the few days left before the end of the year."

The U.S. Solar Market Insight: 3rd Quarter 2011 report (http://www.greentechmedia.com/research/solarinsight) is the most detailed and timely research available on the continuing growth and opportunity in the U.S. The report includes analysis of PV, concentrating solar power (CSP) and concentrating photovoltaics (CPV) technologies, exposing the key metrics that will help solar decision-makers navigate the market’s current and forecasted trajectory.

Highlights from the third quarter report include:

• Grid-connected PV installations in Q3 2011 grew 39 percent over Q2 2011 and 140 percent over Q3 2010.

• The utility PV market installed over 200 MW in Q3 2011, a greater than 400 percent increase in installations over Q2 2011.

• The residential PV market grew 21 percent over Q2 2011 to reach nearly 75 MW.

• California regained a substantial share of overall PV installation in Q3 2011 with 44 percent; the next six largest state markets combined comprised 45 percent of quarterly installations.

While domestic solar markets are booming more than ever, the report also finds that U.S. solar is facing more uncertainty than at any point in recent history. On one hand, solar module prices are falling precipitously and system prices have never been lower; on the other hand, the market faces substantial risks in the form of legislative, financing, political, and market barriers.

"U.S. solar is entering 2012 with a sense of cautious optimism," said Shayle Kann, Managing Director of the solar practice at GTM Research. "There are three questions on the mind of everyone in the market: one, what would be the impact of the 1603 Treasury Program’s expiration; two, can emerging commercial markets like Massachusetts, Colorado, Ohio, Tennessee, and Hawaii ramp up as major markets like California, New Jersey and Pennsylvania trend downward; and finally, how will the trade petition against Chinese solar imports impact market dynamics, both in the immediate term and if duties are ultimately levied?"

With the 1603 Treasury Program scheduled to expire at the end of this year, solar project developers will be scrambling to either complete, or safe harbor, projects in the fourth quarter of 2011 in order to qualify for the program’s grant. This will undoubtedly produce robust installation numbers through the end of 2011. However, the uncertainty surrounding the program’s extension threatens the market’s growth in 2012 and beyond.

Established in 1974, the Solar Energy Industries Association is the national trade association of the U.S. solar energy industry. Through advocacy and education, SEIA and its 1,100 member companies are building a strong solar industry to power America. As the voice of the industry, SEIA works to make solar a mainstream and significant energy source by expanding markets, removing market barriers, strengthening the industry and educating the public on the benefits of solar energy.