Utilities Drive Solar Projects

The second quarter was the largest ever for utility photovoltaic installations in the U.S. Demand for solar electricity from power companies drove a 45% increase in solar installations compared with the first quarter and a 116% increase from last year’s second quarter, according to a report by GTM Research and the Solar Energy Industries Association.

The report tracked new solar energy capacity across the residential, commercial, and utility sectors in the U.S. Utility projects were responsible for 447 MW of a total 742 MW of new systems. The residential market remained flat, and the commercial market shrank 33% from the first quarter. The report predicts that a total of 3.2 GW will be installed in the U.S. in 2012, an increase of 71% over last year.

The utility sector completed 20 solar projects during the second quarter, motivated in part by lower costs. According to the report, utility system prices dropped to $2.60 per W from $2.90 per W in the first quarter. Of the six largest projects, three deployed low-cost Chinese-made modules and three used modules made by the companies that developed the projects.

Among the second group is First Solar, a manufacturer of thin-film photovoltaics. On Sept. 10, the company said its Agua Caliente solar project in Yuma County, Ariz., achieved a peak generating capacity of 250 MW, making it the world’s largest operational photovoltaic complex. First Solar added 100 MW of capacity this summer and expects the project to reach 290 MW when completed in 2014. The company has told investors the price of electricity for new systems will decline to a range of $1.40–$1.60 per W in 2016.

With the additional installations, the U.S. will be home to 10% of global photovoltaic capacity in 2012. Meanwhile, the fastest-growing market for solar energy is China, where installations are expected to double to 5 GW this year. Previous solar energy giants Germany and Italy have seen installations plunge because of lowered government incentives.

“Although global installations should grow overall, manufacturer margins remain severely compressed as a result of persistent overcapacity,” the report states.