According to a recent report released by MIT’s Technology Review, a number of factors are contributing to projections that the US solar market will double by the end of 2010.
One of these factors is a 40% decrease in the cost of PV cells over the past year, which has significantly lowered installation costs. The drop in price was partly due to an oversupply of solar panels caused by the recession. State incentives also contributed to the reduction in installation price. Harry Flemming, CEO of Acro Energy Technologies, revealed that over the past 18 months, the cost of an average five-kilowatt rooftop solar system has dropped from 22,000 to 16,000 thanks to increases in state incentives. Flemming projects a further cost reduction to $13,000 by the end of the year.
Another factor is the solar investment tax credit (a federal incentive) which was expanded to include utilities who were previously forced to purchase their solar energy from third-party sources. Major utilities, seeking to benefit from the 30% tax credit, are investing in large-scale solar power projects which will significantly increase solar energy production within the near future.
In 2010, the release of delayed funds from the 2009 stimulus package are also expected to provide a boost to the U.S. solar market. The U.S. General Services Administration and the U.S. Department of Defense have both signaled their intent to start solar projects this year.
Lastly, another important component of the solar market’s projected increase is the potential for more stringent energy legislation at both the federal and state levels. A jobs bill currently under debate in congress could include a renewable energy standard, requiring more utilities across the country to use renewable energy. Another important law under consideration is the creation of a national standard for connecting solar installation to the grid. Currently, several states do not allow certain solar installations to connect to the grid. A national standard would further increase sales and installations.
MIT’s report cites estimates that project the US accounting for 25% of the global market by 2013 (currently, the US accounts for 8%).