U.S. Solar Installations Will Drop in 2013 (FSLR, SPWR, TSL, STP, LDK, JASO, YGE, CSIQ)

The U.S. solar PV market rose sharply in the second quarter of 2012, compared both to the previous quarter and year-over-year. Total solar PV installations in the U.S. during the second quarter amounted to 741.7 megawatts, up from 512 megawatts in the first quarter and 343.2 megawatts in the same period a year ago.

The data comes from GTM Research’s “U.S. Solar Market Insight Report” for the second quarter of 2012. The U.S. and China are the two remaining large growth markets for solar PV as both Germany and Italy have stalled. In the U.S., utility installations have more than doubled while commercial installations have fallen and residential installations have stalled.

The report notes a few trends:

• System prices continue to fall and the point is fast approaching where retail electricity prices will drive the market, not state-level incentives.
• The third-party financing model for residential installations continues to grow.
• Commercial installations remain captive to state incentives.
• Utility installations are booming now, but new procurement has slowed.

GTM Research thinks 3,200 megawatts of solar PV will be installed in 2012, down 100 megawatts from the firm’s earlier estimate. That number represents a 71% increase over total 2011 installations.

The installed system price fell by 22% quarter over quarter, from $4.44 per watt to $3.45 per watt. The year-over-year-decline came to 33%.

Most important for solar PV module manufacturers is component pricing. And here’s where things get tough for U.S. makers like First Solar Inc. (NASDAQ: FSLR), Sunpower Corp. (NASDAQ: SPWR) and Chinese firms Trina Solar Ltd. (NYSE: TSL), Suntech Power Holdings Co. Ltd. (NYSE: STP), LDK Solar Co. Ltd. (NYSE: LDK), JA Solar Holding Co. Ltd. (NASDAQ: JASO), and Canadian Solar Inc. (NASDAQ: CSIQ).

Blended average module pricing fell from $1.56 per watt in the second quarter of 2011 to just $0.87 per watt this year, a decline of 58%. Chinese makers have not shown any significant impact from the anti-dumping tariffs imposed by the U.S. government earlier this year. GTM Research estimates that the tariffs add just $0.08 per watt to the cost of Chinese solar modules shipped through Taiwan under different tolling arrangements.

For 2013, the research firm expects market growth for solar PV to slide from 71% this year to 21%. The firm also thinks expansion in the years through 2016 will be about 25% to 30% — not bad, but far lower than the growth rates of the past few years.

An executive summary of the GTM Research report is available here.

Paul Ausick