The U.S. solar market for photovoltaic and solar thermal electricity generation is projected to grow annually by 42 percent to reach 44 gigawatts (GW) by 2020 as long as the industry can attract $100 billion worth of investment, according to a report from Bloomberg New Energy Finance. The market researcher expects rapidly declining equipment costs combined with stronger government support to spur growth over the next decade.
The report also finds that high electricity prices and generous incentives are two of the biggest factors behind the market’s growth in the U.S.
The report, “Quantifying the US solar market: system returns and new build projections,” finds that solar-powered generating capacity — using photovoltaic and solar thermal electricity technologies — could reach 4.3 percent of the nation’s power capacity by 2020.
Today, the U.S. has 1.4 gigawatts of installed solar power capacity, ranking it fifth globally, according to the report. The forecast capacity from large-scale solar thermal projects is projected to rise from 0.4 gigawatts currently to 14 gigawatts by 2020. Photovoltaics is expected to achieve a 34 percent annual growth rate, reaching 30 gigawatts by 2020.
While the report indicates that the cost of a typical photovoltaic module has dropped by more than half over the past two years, solar power is still more expensive than other power sources. As an example, the unsubsidized cost of best-in-class photovoltaic and solar thermal electricity generation is just below $200/megawatt-hour — nearly four times the equivalent cost for a coal-fired power plant ($56/megawatt-hour) — and between two and four times the cost of onshore wind power, says the market research company.
The report expects that policy measures such as tax credits, capital expenditure grants, generation incentives and renewable electricity credits will be key drivers behind solar growth at least over the next three years.
The report also projects that the commercial sector will lead the way with around half of all photovoltaic installations between now and 2020, with utility and residential systems contributing one-quarter of future installations.
Taking into account incentives currently available, researchers estimate that commercial-scale photovoltaic systems can obtain unlevered returns of 8-14 percent in states such as Hawaii, Texas, New Jersey, and Massachusetts.
Two recent solar installations, adding to the solar portfolio in the U.S., include Del Mar Farms and Allsteel.
Del Mar Farms has activated its 354-kW photovoltaic (PV) system, which is expected to generate more than 660,000 kilowatt hours per year and pay for itself in about four years. The roof-mounted solar power system is spread across three buildings and offsets Del Mar’s main energy meter by more than 90 percent. Cenergy Power designed and installed the system.
Allsteel recently installed 42 solar panels on the roof of its 200,000-square-ft. plant in Muscatine, Iowa, which is expected to generate between 10,000-13,000 kilowatts of energy each year, reports Quad-City Times. The solar installation is estimated to prevent the emissions of 37,000 pounds of carbon dioxide, and help the company reach its goal of reducing energy consumption by 5 percent each year.