Installations of solar panels are still expanding in the United States, but manufacturing is down, and a great deal of factory capacity is idle, according to a report on the solar energy market for the second quarter of this year.
The number of solar cells put on the roofs of houses has retreated, yet nonresidential rooftop installation is thriving, according to the report, produced by the Solar Energy Industries Association and a consulting firm, GTM Research.
The industry is facing challenges, with a credit crisis in Europe cutting into demand, the worldwide supply of equipment increasing, and some American utilities’ subsidy programs fully subscribed. But Rhone Resch, the executive director of the solar association, predicted nonetheless that installations would continue to grow significantly each year.
In April through June, installations were 69 percent higher than in the comparable period of 2010, and 17 percent higher than in the first quarter of 2011. The industry suggests that this is impressive because first-quarter installations may have been artificially inflated.
By fall of last year, companies were worried about the potential expiration of tax credits at the end of 2010, so they started on an unusually high number of projects and finished them in the first quarter.
But the shape of the market is changing. Installations on house roofs were down 5.7 percent in the second quarter from the first; installations by utilities were up 37 percent, and installations on commercial roofs grew 22 percent.
The report gives a detailed financial explanation for the trend. It is far cheaper, per watt of capacity, to put a solar panel on a commercial roof or out in the open desert than on a house.
In the second quarter, residential installations cost $6.42 per watt; nonresidential installations cost $5.20 per watt and installations done by the utilities themselves cost $3.75 per watt. Because home installations are usually counted in thousands of watts and installations on warehouses and other big commercial roofs are counted in hundreds of thousands or even millions of watts, the 20 percent price difference can add up to a lot of money.
The report blamed the slowdown in manufacturing largely on the financial situation of Germany and Italy, which together accounted for almost two-thirds of global installations in 2010. In the second quarter, American cell manufacturing capacity was 561 megawatts for the three months, but actual production was just 333 megawatts. Production dropped 11 percent in the second quarter from the first quarter.
“We have a global market,” Mr. Resch said. As markets have softened and as new manufacturing has come on line, “instead of running at three shifts, you’re running at two shifts” at factories.
That spare production capacity and decline in manufacturing is one reason that the solar manufacturing company Solyndra went bankrupt in September despite taking $528 million in loans from the federal government.
But new production continues to come on stream. On Friday, Stion, which makes thin-film modules, cut the ribbon on a factory in Hattiesburg, Miss., that will produce 100 megawatts a year in solar cells. (By comparison, in the second quarter, the entire country was installing little over 1,200 megawatts a year.)
The international drop in solar cell demand has pushed down prices, which has helped spur the rise in American installations, the report said. An open question for the future is how much more demand will be created by these lower prices.
Mr. Resch said that the drop in prices had an up side. “We have a very competitive market, and prices are declining, and those who can’t compete are going out of business,” he said.
“The good news for the consumer is we enjoy the lowest cost of solar in history,” he said.
The New York Times