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U.S. SOLAR MARKET IS BOOMING

Solar panel installations in the U.S. reached about 1.4 gigawatts during the second quarter of this year, reflecting falling costs and a rush to complete projects ahead of a shrinking tax credit, says a report released Wednesday.

Overall, the country is now home to more than 20 gigawatts of solar panels, said a report by GTM Research and the Solar Energy Industries Association. That should generate enough electricity to serve 4.6 million homes, the report says.

The 20-gigawatt figure refers to the generation capacity, which is different than the amount of energy, in kilowatt hour, that can be produced over certain duration. A solar power plant produces less electricity than a natural gas or nuclear power plant of the same capacity because the fuel needed (sunlight) is only available for certain hours during the day. But generation capacity remains a useful metric for power companies and grid operators to plan electricity production and delivery.

The residential market continues to grow like gangbusters. The second quarter added 473 megawatts, a record and a 70% jump from the same quarter a year ago. Falling prices and financing options, such as leases and loans, from a greater number of installers, are big reasons for the growth. A solar panel system prices fell between 9% and 12% during 2014.

While the growth in the residential space has spread to more states than before, but the top five states accounted for nearly three-fourths of the cumulative installations in that market segment. Major residential installers include SolarCity, Sungevity, Sunrun and Vivint

Utility-scale projects also are growing quickly. The 729 megawatts of the projects completed during the second quarter made up 52% of the total installations during that period. More than 5 gigawatts are being built now. The big driver for the growth is a 30% federal tax credit that is set to fall to 10% come January 1, 2017. Developers are hoping to complete their projects by the end of 2016. Key utility-scale project developers are First Solar FSLR +2.08%, SunPower and SunEdison.

The third market segment, which makes up of projects for businesses, government agencies and nonprofits, showed disappointing second quarter results, however. Installations fell 33% from the year-ago period. This segment is particularly tricky to tackle mainly because there isnít a standard metric, like FICO scores, for gauging a potential customerís credit worthiness. So, it costs more time and money to evaluate and finance each project. Commercial projects also are usually so much smaller than utility projects that the cost of developing each of them significantly cuts into the profit that can be made. Many of the installers in other segments also serve the commercial space, such as SunEdison, SolarCity and SunPower.

GTM expects to see 7.7 gigawatts of solar panel installations for 2015 overall, and that would represent a 24% increase from 2014.

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Written by: Ucilia Wang, Forbes


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