Solar PV & Renewable Energy prices

Global Trends in Solar Power: USA

The solar industry in the US is on an interesting trajectory of development and there are a couple of key factors at play that effect the growth and future viability of the industry. The last two years have been rocky for the US solar industry, with intense competition from Chinese solar panel manufacturers and resulting chain reaction of bankruptcies of a number of prominent US solar manufacturers. Despite these setbacks, the industry has been seeing growth, as the prices for solar panels have dramatically fallen, solar power became more accessible to consumers. Today, the US is the third largest solar market in the world, but it still has a lot of room to grow. It remains to be seen when solar power will reach parity with grid electricity and will become affordable for everyone who wants to switch to a clean source of energy. How soon this will happen will depend on many factors including government support, private investments, prices of solar manufacturing and installation, global competition and demand.

image of Obama speaking about US Solar industry

Growth of solar installations across the US.

Currently, solar power accounts for less than 0.1% of overall U.S. electricity generation, however there is a strong trend of steady growth in the number of new installations of solar panels every year. In 2011, the solar market doubled in size, with an estimated 2.1GW of new capacity installed nationwide. This translates into the total number of grid-connected PV systems nationwide reaching almost 215,000. In 2011, installations of PV arrays increased 140 percent in Q3 2011 over Q3 2010. By the end of 2012, the total installed solar capacity is expected to reach 7.6 GW.

SEIA – US Solar industry is under attack (video):

While many states across the US have experienced rapid growth in solar installations, California remains the largest market and its renewable energy standard is driving much of the country’s PV market. Contributing to this unprecedented growth have been the decline in solar panel costs and attractive federal and state incentives and tax breaks.

State of the US Solar Industry

In a struggling economy, the solar industry has been a source of new jobs in fields such as manufacturing components, PV array installation, and system design. The number of employees in the solar industry more than doubled since 2009, and reached over 100,000 in 2011, despite reducing Government and Private investments in US Solar Industry. There are about 100 manufacturing facilities that employ 25,000 workers.

Production is clustered in a few states which include: California, Oregon, Texas and Ohio. According to the reports by the US Energy Information Administration, The U.S. cell and module market, measured by domestic shipment revenues, has grown from $1.2 billion in 2006 to $6.4 billion in 2010. Currently, domestic PV manufacturers operate in a highly competitive global market, which is dominated by manufacturers from China, who have been flooding both the US and European markets with very cheap solar panels, making it next to impossible for domestic Solar, manufacturers to compete, and forcing many US Solar companies into bankruptcy.

While the decline in equipment costs has been greatly beneficial for consumers, it has been a major issue for many manufacturers who have been forced to file for bankruptcy. The US manufacturers who still remain in business and want to be successful in the future are actively seeking new ways to restructure the production process, cut costs, and move production to countries like Malaysia, Philippines, China and Mexico, to become more competitive with their Asian counterparts. The June 2012 Congressional Research Service Report (CRS) prepared for members and committees of Congress estimates that even if popularity of solar power grows, falling equipment prices will make it difficult for domestic manufacturers to remain profitable and the solar manufacturing base in the US is likely to continue to be weakened. It is possible that US will be in a situation where it will continue to increase its solar installed capacity, moving closer to grid parity, but with solar equipment imported from countries like China, rather than installing US-made solar panels.

The US government is trying to prevent this from happening and is taking an active role in protecting US solar manufacturers by imposing severe penalty tariffs on Chinese manufacturers who have been found guilty of dumping solar panels into the US market at below fair market prices, totally undercutting US manufacturers. While tariffs may serve as a small deterrent to some Chinese manufacturers, and help US manufacturers in the short-run, this will likely not be a viable long-term strategy, as more Asian countries such as Taiwan and India are starting to manufacture and sell good quality solar equipment at very cheap prices.


One of the major challenges facing the solar industry industry in the US as well as around the globe is overcapacity. The one benefit of overcapacity is that it has led to a significant drop in module prices (more than 50% over the course of 2011), which has made solar power accessible to thousands of interested consumers who were unable to afford it before. The future years will see a very tight race and cut-throat competition among remaining large manufacturers from around the world who can both manage to offer extremely low module prices while making profit.

Government Support

Government support has been instrumental in helping the US solar industry grow and develop. The Obama administration has been very vocal about the importance of developing domestic solar industry as a way to reduce our dependence on foreign oil as well as to create more jobs in the sluggish economy. Generous tax incentives and stimulus funding spurred recent double-digit growth rates in new PV installations. However, currently the solar industry is facing an issue that it will need to find ways to deal with: a number of federal policies that have helped to increase domestic demand for solar PV products have expired or reached their funding limits. These incentives include the 1603 cash grant program and the advanced energy manufacturing tax credit; S. 591, which would extend the credit. Moreover, unless extended, the commercial Investment Tax Credit for PV systems will revert to 10% from its current 30% rate after 2016, while the 30% credit for residential investments will expire. Other policy drivers include a federal loan guarantee program and state renewable portfolio standards in more than half the states, which require production of electricity from clean sources.

Solyndra before bankruptcy (video):

The recent strings of bankruptcies among big solar manufacturers like Solyndra, which have received government funding, a depressed state of economy and ballooning deficit growth has made many policymakers very cautious about renewing the generous incentives of the previous years. Because of the upcoming presidential election both Republicans and Democrats are aggressively try to show who is better fit to manage the country’s finances, cut spending and ultimately get the country out of the economic downturn. As a result, it will most likely be a major challenge for domestic solar companies to convince the government to extend them further assistance.

New Competitor Threat: Shale Gas

Another factor that will adversely affect solar’s chances to become a competitive source of electricity is the rapid development of shale gas. Currently, shale gas has the potential to lower the cost of gas-fired power generation, thereby significantly reducing the cost-competitiveness of solar power, particularly as an energy source for utilities. As a result, solar power’s viability in the US as a major source of electricity is up in the air. Unless solar industry will be able to come up with superior innovative technologies that will make production of solar power as cheap as grid electricity, it will not be able to capture a big share of the market and overtake fossil-fuel produced electricity.

Read part I –

Read part II –

Levchik (Leo) is a renewable energy activist from Boston, MA, and has been involved with alternative energy and green construction since 2004.

In 2009, Leo and his green roofing company ( sponsored Boston’s Solar Decathlon Team, providing materials and installation labor to install a cool white roof on the top of Curio home (Joint effort by Tufts University and Boston Architecture College) – more info about the project here.

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Written by Levchik B

Posted on June 28th, 2012 at 7:07 pm

Posted in Solar Prices

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