Sharp reductions in market prices combined with the impact of regional and national policies pushed the North American photovoltaic (PV) market to a new quarterly peak with 0.93 GW installed in Q4’11, according to the latest North American PV Markets Quarterly report issued by NPD Solarbuzz. The solar incentive policy mix in both the United States and Canadian markets drove up demand in large-scale ground-mount systems, which was 59% of this total. Regionally, the New Jersey, California, Arizona, and Ontario accounted for two-thirds of Q4’11 demand.
In the US, the expiration of the Federal Cash Grant caused an acceleration of project activity to qualify for the end-year deadline. The Cash Grant was instrumental, supporting 1 GW of PV capacity by the end of 2011. At the state level, the California Solar Initiative (CSI), the nation’s largest ratepayer funded program, received additional funding of $200 million during Q4’11, enabling it to address a long waiting list for customer-side distributed generation.
Following the raising of its Renewable Portfolio Standard target, California has started implementing several programs that will stimulate wholesale distributed generation projects between 1 and 20 MW. On the other hand, continuation of New Jersey’s strong Q4’11 growth is under threat due to over-supply of Solar Renewable Energy Credits (SREC). Both New Jersey and Pennsylvania failed to enact legislation to fix the SREC over-supply by revising their RPS solar obligations.
In 2012, US demand growth will be supported by a 25 GW non-residential and utility project pipeline. This includes projects that qualified for the Cash Grant, which will only ship and be installed this year. Residential demand is forecast to grow modestly in 2012, stimulated by lower system prices and lease financing programs, but held back by declining market prices in the five key states that have met their RPS requirements.
There will be more restructuring in downstream channels due to changes in end market segment mix. Residential demand, fragmented into small state markets, will cause larger downstream companies to exit this market segment while new entrants in the project developer role seek to bring the huge non-residential and utility project pipeline to market.
“The key uncertainties on the rate of US demand growth in 2012 relate to the impact of the end of the Federal Cash Grant and approval timetables for large utility scale projects together with the market impact of states that have met their RPS,” said Junko Movellan, NPD Solarbuzz Senior Analyst. “In 2011, the pace of market price reductions was accelerated by the growth in Chinese module supply. The uncertainty caused by the Chinese anti-dumping case started to reshape supply and pricing in Q4’11; the ruling will shape the 2H’12 supply mix.”
In Canada, large-scale projects completed during Q4’11 had been approved under Ontario’s previous incentive program, RESOP. In contrast, the newer FIT program has been most successful in spurring approximately 100 MW of smaller scale residential and non-residential projects during 2011. Large-scale systems under the FIT have been slow to start, due mainly to delays in regulatory and program-related approvals. However, advancement in other areas—project financing and execution of product supply agreements—is evidence that these projects are well advanced, and most are positioned for installation during 2012.
“The biggest uncertainty in the Canadian market continues to revolve around the outcomes of the Ontario FIT program review that started in October 2011,” said Michael Barker, NPD Solarbuzz Analyst. ”2012 demand projections are dependent on the retention of the key elements of the existing program structure, but anticipate rates falling between 10% and 30% in concert with greater specificity on technology or customer-type goals.”