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Solar is the “Fastest Growing Industry in America” and Made Record Cost Reductions in 2010

By Climate Guest Contributor on September 16, 2011 at 5:44 pm

"Solar is the “Fastest Growing Industry in America” and Made Record Cost Reductions in 2010"

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Stephen Lacey:  The U.S. solar industry grew 102% last year and is on track to grow another 100% this year. What other industry doubled its growth during one of the worst economic periods in our history?

The GOP has been using the Solyndra debacle to talk about “pet alternative energy.” This nonsense ignores the incredible growth and cost reductions taking place in the solar industry. Since 2008, average PV prices have fallen 80%. And with innovative approaches to installation, the total installed cost of installations have fallen substantially as well.

A recent report found that America actually had a $1.9 billion trade surplus of solar products to the rest of the world in 2010. And that same report, put together by GTM Research, found that 73% of the economic value of a solar installation stays in the U.S.  Rather than let the conversation be hijacked by the pro-pollution gang, we need to use the Solyndra story to continue talking about the domestic value of solar.

A recent report released by the Lawrence Berkeley Lab again illustrates the continued progress in the American solar market.

Reporting for Clean Technica, Andrew Burger gives us an overview of that report, and others.

The average cost of installing residential and commercial solar photovoltaic (PV) systems in the US dropped a record 17% in 2010 and it continues to drop in 2011, an additional 11% through June, according to the Lawrence Berkeley National Lab’s “Tracking the Sun IV”report.

Slowly but surely, the US market for solar PV power is growing and developing. Actually not so slowly. The US solar power market continued to grow at a record-breaking 66% pace in 2011′s first half. Domestic solar manufacturing rose 31%, while 1.1 gigawatts (GW) of utility-scale solar power is under construction, according to GTM Research and the Solar Energy Industries Association’s (SEIA) “US Solar Market Insight.”

Green jobs are growing as well. Some 93,500 Americans worked in the US solar industry in 2010, and more than half of the country’s solar companies are planning to expand hiring in 2011, according to The Solar Foundation’s “The National Solar Jobs Census.”

The solar power industry is the fastest growing industry in America. We are delivering strong economic returns and good jobs at increasingly competitive prices, as this National Lab report shows. This report is further proof of what Americans from across the country already know: smart solar policy creates jobs and economic growth for communities hit hard by the recession,” said Rhone Resch, SEIA president and CEO.

The drastically lower cost of solar PV modules has been a big, but not the sole, factor in spurring growth. Costs outside of modules, which make up a significant percentage of overall costs, have been dropping as well, the report authors note.

Government support and public-private collaboration have been key to the success. The cost of labor for installation, overhead, balance of systems and other non-module costs decreased 18% year-to-year in 2010. While module costs are driven by global supply and demand, non-module costs are “most readily impacted by state and federal policies that accelerate deployment and remove market barriers,” they write.

“The impressive cost reductions highlighted in this report did not happen by accident. It took business innovation and market-building policies at all levels of government to achieve the necessary economies of scale,” commented Adam Browning, executive director of the grassroots Vote Solar Initiative.

“There has never been a better time for customers or utilities to harness the sun for power. It’s time to double down on our nation’s investment in this job-creating, homegrown energy resource.”

US solar power incentives are also delivering greater returns for investors, while government and industry incentives are falling, the researchers found. The average size of direct cash incentives from states and utilities, as well as dollar-per-watt value of the federal tax incentive “have both steadily decreased since their peak,” according to the Berkeley National Lab’s report.

Additional cost reductions in solar PV costs over the near-term are likely to be realized, given that current initiatives and support are sustained, the report authors conclude.

Germany has built the world’s leading solar market and industry, both on the supply and demand side. At $6.9/Watt, average installed solar PV systems costs in the US is significantly higher than in Germany, where the average cost to install a residential or commercial solar PV system was $4.2/W. Germany’s cumulative grid-connected solar PV capacity far surpasses that in the US — 17,000MW vs. 2,100MW.

The full report and supporting materials are available for download on the Lawrence Berkeley National Lab website.

This story was originally posted at Clean Technica

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44 Responses to Solar is the “Fastest Growing Industry in America” and Made Record Cost Reductions in 2010

  1. SecularAnimist says:

    Cheap, high-efficiency, mass-produced photovoltaics are about as close to a panacea as we are going to get.

  2. Ernest says:

    It has the advantage that it can be rapidly deployed and can be distributed. The only thing left is that it is not “baseload”. Need some miracles in cheap storage.

    • sault says:

      Well, solar cells could eventually replace most roofing material entirely and the area that would cover could supply 10 or 20% of peak load. Widespread on and off-shore wind power could do another 20 – 30% easily, maybe more. Geothermal power is easily accessible under most of the Mountain West while wave energy will eventually supply some amount of baseload demand along the coasts. The millions of electric cars that will be coming onto the roads over the next few decades can provide short term storage and grid services that improve their cost metrics while pumped or underground compressed air storage can provide more long-term storage to cover the valleys in clean energy supply that are difficult to overcome.

      The Southeastern U.S. may have to keep 10 – 20% of its energy supply in nuclear just because it will have a hard time given its renewable resources. That or they might be able to harness biomass power if done properly. Either way, they might be importing their energy from the rest of the U.S. just like the do with government cash now.

      Baseload is really a function of demand, not supply. Therefore, demand management and efficiency can go a long way in this regard. I seriously believe that we throw away about half of the energy in this country for no good economic or technical reason. A good deal of that “baseload” demand could be lighting empty parking lots or cooling unused retail or office space. Once you work that side of the equation, a little natural gas baseload power (drilled responsibly or from anaerobic digestion) can fill in the gaps until the 2050s or so.

      The only real unknown is whether the entrenched energy incumbents will be willing to either transition to a clean energy future or relinquish their place in the energy industry for others to take their place. It looks like they are heading for the latter whether they know it or not.

      • Ernest says:

        Another is the whole area of “artificial photosynthesis”, “electro-fuels”. But this is far into the future, still basic science and R&D. One possibility, closer to a 8 year time frame is MIT’s Daniel Nocera’s “artificial leaf” which is actually a cheaper way to do electrolysis. He has founded a company, Sun Catlytix which has received funding from ARPA-E and more recently the Indian Tata group to help commercialize his discovery for developing countries. If it succeeds, esp. in the cost aspects, it will have the advantage of no transmission lines. Each house will be it’s own 24/7 power station. The analogy would be like the cell phone leap frog over land line phones in the developing world.

    • Target0 says:

      Get the daytime load covered then worry about the night.

  3. greg says:

    Great analysis. I disagree with one small point. The GOP and its financial backers are not “ignoring” these trends; they are fully aware of them. Their intent is not to “ignore” but to distract.

    • Exactly! The co-ordinated Solyndra attack machine highlights how threatened the GOP financial backers really are by any emerging solution to fossil fuel pollution. The only argument left to Big Fossil at this point is that we don’t have any alternative so we just have to hold our noses and blast the tops off mountains, drill in the Arctic, frack the life out of our landscape and gouge up the tar sands.

  4. Bob Savage says:

    It is, in part, this very success that caused the failure of Solyndra. Their strategy was based on an alternative to the high cost of traditional solar technology. As the silicon-based solar panels became cheaper to produce, the market viability of Solyndra’s product disappeared.

  5. AlanInAz says:

    The average installed cost seems high to me. I paid $4.6/watt in 2010 for my solar panel install in Tucson. I believe prices are even lower now. Solar is even more affordable than depicted in the report.

  6. Dawgdays says:

    I would have to disagree with this analysis. And believe me, I am pro solar. The problem is that the bottom is dropping out of the market and the US companies are the ones getting squeezed due to a glut which will only continue into 2012 and beyond. Thats great news if you want to buy solar but terrible news if you are a US producer. China heavily subsidizes their solar producers and when you add in their labor and environmental regulation savings you get an extremely tough market for US players as we are already starting to see. The big flaws in this analysis come in where big US contracts that were sold last year at prices, where there was actually a decent profit margin, are almost non-existent today. The supply outstrips demand and the price is below cost for most US suppliers. Not a good scenario. Even with solar being more affordable today than ever, most of the US companies will not be able to survive long with the cheap chinese prices. We are disadvantaged even with green subsidies. Unless there are some true innovations coming online soon that lower US manufacturing costs the chinese are going to eat our lunch and squash another industry. This report makes many assumptions based on last years data and the solar game has changed dramatically since then. I can now buy a 10kW system for my home for $19k where this time last year it was double that. Great for me but disastrous for the US producers.

  7. Sasparilla says:

    First Solar, the US’s lowest cost solar cell producer, being talked about on CNBC today with an industry analyst. It has had its target stock price cut to 1/2 its current price because it is selling its modules at a loss (its only making money on total projects that it puts together) – this would be a stock price of about 1/10 of what it was in 2008.

    The analyst said the reason for the loss is that the Chinese companies are given “free money” by their government and those Chinese subsidies and their companies aren’t going way anytime soon.

    So yeah, this is the fastest growing industry here in the US (lots of installation jobs presumably) because the costs are dropping rapidly, but they’re dropping so rapidly because the Chinese are dumping panels at a loss to run our companies out of business.

    We’ve had 3 US solar cell producers go bankrupt this year (so far) and the lowest cost producer of solar cells in the country (First Solar) can’t sell them at a profit because the Chinese are dumping.

    This situation, unless the domestic market is protected (bet the Chinese are lobbying Obama), will lead to the complete loss of the US Solar Cell manufacturing industry – we developed the solar cell here – then this dramatically expanding industry will see us being completely dependent on China for solar panels.

    This is exactly what the Chinese did with the rare earth industry – they used massive government subsidies to sell at a loss, dumping everyone else (in the world) out of the business, then they said to get unlimited access to rare earths you needed produce in China while restricting exports sending the export prices up radically (measured in orders of magnitude).

    • Merrelyn Emery says:

      Sasparilla, perhaps it is time the USA put away its rigid adherence to the profit making model and tried a little ‘socialism’.

      It is in everybody’s interest to have low cost solar everywhere and I don’t care where its made or how it is financed. Let’s just flood the world with solar to give ourselves a chance of survival, and if that means the USA needs to subsidize production, so be it, ME

      • Mulga Mumblebrain says:

        Unfortunately, Merrelyn, market fundamentalist capitalism is the religion of the US ruling caste. They are no more inclined to change their habits than a pig is to fly. Their habitual response is to bully others to follow their example, then declare it ‘freedom of choice’.

  8. Mark Shapiro says:

    As the cost of installed PV drops to $1/Watt, it takes over electricity production, worldwide.

    The only way to do that is to eliminate the installation cost. Make PV panels a standard roofing material.

    . . .

    For the poorest 2/3 of the world, small scale PV is the ONLY affordable source of electricity. HINT: PV, cell phones, LED lights, and batteries are all high value, low-voltage, DC products that scale DOWN very well.

    • Malcreado says:

      Dupont already makes a solar shingle, no idea how much it costs though.

    • SecularAnimist says:

      Mark Shapiro wrote: “Make PV panels a standard roofing material.”

      Yes. And a standard window material. And a standard automobile finish. And a standard road surface.

      In the not too distant future, the term “photovoltaic panels” will be an anachronism. We will be talking about photovoltaic materials and photovoltaic surfaces. PV will be as ubiquitous and integrated — and as “invisible” — as microprocessors are today.

  9. zach says:

    Thanks, Stephen. Great intro & title.

  10. David B. Benson says:

    Using NREL’s “Simple Levelized Cost of Energy Calculator” and assuming an 18 year 5.1% loan, AlaninAZ’s US$4600/kW, no O&M at all, and a generous capacity factor of 22% I still obtain a sLCOE of US$0.225/kWh.

    Looks expensive; what did I do wrong?

    • dan p says:

      I’m not well-versed in these calculations, but did you put in 18 years as the total lifetime for the initial capital investment? Because that seems much too short given the 25-year warranties on lots of solar panels.

      I don’t see any reason they won’t keep putting out power with slow degradation for many decades, but I’m not sure what lifetime is usually assumed in these estimates.

      • David B. Benson says:

        Yes, I used an 18 year loan. I doubt one could obtain a commercial one for much longer than that. However, assuming a 25 year loan, still @ the 5.1% rate, the sLCOE is US$0.172/kWh which, to my eye, remains rather pricey power.

        • Chad says:

          It’s only pricey in a world of subsidized coal and natural gas. Therein lies the problem.

        • Anne van der Bom says:

          The catch here being that this is a fixed price. The electricity price will go up over those 25 years.

          A second remark is that this is very much the USA way: use a credit. What if people have money in a savings account with a 3% interest? What then? For those people it might make a lot more sense to do this.

          • SecularAnimist says:

            Anne van der Bom wrote: “What if people have money in a savings account with a 3% interest?”

            Wow, if you can find a savings account that pays 3% interest, let me know.

        • dan p says:

          David – the length of the loan shouldn’t be coupled to how long the equipment lasts. Even if you can’t get extremely long-term loans, the initial investment is then just fully paid off after say 18 years, giving you nearly free power (aside from maintenance/rent). The calculation you’re doing assumes you then buy new equipment at the end of the loan cycle.

          But I agree without subsidies and without the true costs included for fossil fuels, solar still will look expensive.

    • Joe Romm says:

      Double the lifetime, for one.

    • AlanInAz says:

      I paid $39,400 (before subsidies and tax credits) for my system. Annual output is about 16,000kwh per year. Over 20 years I expect to receive 300,000 kwh. I paid cash so there was no financing cost, but there is an opportunity cost. Assuming an after tax opportunity cost of 2.5% per annum, that adds $20,000 to the present value cost of my system. Average cost over twenty years is $0.20/kwh. Neglecting opportunity cost would lower the average cost to $0.13/kwh. If I must replace my inverter then the cost will increase by about $.014/kwh. My contract with the utility is twenty years but the panels will last longer. Obviously, cost declines as the duration of use increases. If viewed over thirty years the economics look better.

  11. Chris says:

    One correction of sorts to the analysis – a drop from $7.6 / watt to $6.2 / watt is a 20% drop or a cost of 80% of the original, instead of the statement in the article:
    “Since 2008, average PV prices have fallen 80%.”
    I also think this article could be strengthened by noting the ranges of installed solar prices, and comparing them to other forms of energy.

  12. Dr.A.Jagadeesh says:

    Yes. Solar is the fast growing Industry in US as well as in China. With mass production the cost should come down. Another option is increased effoiciency.Developing countries will certainly benefit by cost effective solar power.

    Dr.A.Jagadeesh Nellore(AP),India
    E-mail: anumakonda.jagadeesh@gmail.com

  13. A J says:

    Quick, someone tell David Brooks about the jobs potential. He was still going at it today:
    http://www.pbs.org/newshour/bb/politics/july-dec11/brooksandmarcu_09-16.html

    … DAVID BROOKS: There’s the scandal involving that, the potential scandal, but then the bigger problem is that they have this big program, tens of billions of dollars which they hope to use to create 65,000 jobs. So far, they have created something like 3,000 jobs.

    And so the green energy package — or the green jobs package, which was really for three years a centerpiece of Obama’s energy package, it may be good policy because we may get some innovative technologies. It is not a jobs policy. The jobs are simply not being created in green energy.

    JEFFREY BROWN: What about the potential scandal, though? Where is that being pushed and where might it lead?

    DAVID BROOKS: Well, the scandal would be that in part because there is a big Democratic donor supporting Solyndra, in part because it seems that, within the government, within the bureaucracy, even the professional bureaucracy, some of the steps you take to get this loan were bypassed.

    And there may have been pressure from the White House to get people to bypass these steps.”

    • Mulga Mumblebrain says:

      David Brooks!!?? Sorry. but if David Brooks said that it was a fine, sunny, day, I’d reach for my Luger..oops…sorry…umbrella.

  14. Chad says:

    Apparently, it is the low price of oil that is holding solar back.

    “Loan guarantees for solar programs engendered the most criticism from committee Republicans. Stearns closed the hearing by urging the Administration to reexamine its commitment to solar loan guarantees, noting that “even [with gasoline] at $140 a barrel, the idea that solar will ever break even is questionable.””

    http://pubs.acs.org/cen/news/89/i38/8938notw1.html

    Are Republicans really this stupid? Or is it evil?

    • SecularAnimist says:

      Chad wrote: “Are Republicans really this stupid? Or is it evil?”

      The Republicans are not stupid. They — or rather, the fossil fuel corporations whose profit interests they are protecting — understand perfectly the threat that cheap, high efficiency, mass-produced photovoltaics represents to their industry.

      That’s why they have for decades done everything in their power to thwart, obstruct and delay the development and deployment of solar technology.

      And that’s why they are going all-out now to crush the explosive growth of the solar industry.

    • Mulga Mumblebrain says:

      Chad, how are you hanging?? Enough inappropriate over-familiarity! The denialists pull the same lying scam here, too. For years they ritually chanted ‘Solar is too expensive’, and, when it was pointed out that every industry becomes cheaper if mass production, market demand and technological innovation are allowed to progress, they either ignored it, or denied it, without evidence, reason, logic or argument ie in their habitual manner. They’re still doing it now, only now they have to flagrantly lie about solar demand and cost, but that presents no difficulty as they are without conscience.

  15. Sasparilla says:

    “It is in everybody’s interest to have low cost solar everywhere and I don’t care where its made or how it is financed.”

    I have to disagree with part of what you said here – the ends do not justify the means. Although I’m sure the Chinese are lobbying the Obama administration with just this line of thinking you displayed here.

    Just because the biggest thug on the block (the Chinese government gives its photovoltaic industry $30 Billion a year – that’s 15 times our solar industry trade surplus for 2010) is trying to illegally dump the US (and the rest of the world) photovoltaic industry out of the business so the entire world can be dependent on China for solar panels in the future – doesn’t mean we say “great, I love these low prices, its for the better of everyone, they’ll always keep them low, let them do it”.

    The prices in photovoltaics were already coming down over this last decade because of the innovation of the industry – prices were coming down and producers could make profits while doing so – that is sustainable from a business standpoint. The Chinese have only come on the scene as a major force in the last couple of years – and its not because they have great technology, its a generation or two behind the US companies, but because of the government covering them they just sell their panels at a loss running everyone else out of business.

    Remember the Chinese did this previously with the rare earth element industry (elements used in hybrid and electric car batteries and electric motors used in hybrid and electric cars as well as other special applications etc.). The US was the leading producer, the Chinese came along with government subsidies and ran the entire world out of the business. After a couple of years they decided they didn’t want to export rare earth elements like they did before (unless you bought and produced with them in China – then you could have all you want at low prices), this caused the prices of the rare earth elements to go up by orders of magnitude (factors of 10), except in China – way higher than they were when we produced them – but nobody produces them anymore so we just have to smile and take those prices. So much for those great prices they were giving.

    Strategically the US & Europe needs to produce sustainable technologies, including solar panels – because we are going to need them in the future (and once you stop producing them you loose the ability to do so in the future). The Obama administration needs to protect this industry from the Government funded Chinese Industry – unfortunately I’d bet they’re listening to the Chinese government more than anything else and nothing will be done until this industry is dead or dying in the US (which won’t be more than a year or two).

    • Bill Woods says:

      “… and once you stop producing [PV panels] you lose the ability to do so in the future.”

      No you don’t. The Chinese went from roughly zero to a dominant position in a few years. There’d be nothing to stop others from ramping up manufacturing capacity if they tried to jack up prices.

      Which means there’s little point in trying to compete as producers — profit margins will never be better than razor-thin. That’s bad news for anyone who wants to sell panels, but good news for anyone who wants to buy them. As long as the Chinese government is willing to sell panels below cost, it makes more sense for us to take advantage of their largesse. And keep on doing R&D, of course.

  16. David B. Benson says:

    Thanks to everyone who responded to my attempts to compute sLCOE for solar PV installations. I’ll have to stop thinking in utility terms and start thinking in consumer terms.

    • David B. Benson says:

      I’m willing to go to 25 years, but not longer, for the life of a solar PV system. I assume utility charges will go up 4% per year (3% general inflation plus 1% more). I assume I’ll need US$20/kW-yr for O&M (no variable O&M and no fuel cost). Again, I’ll use a capacity factor of 22%.

      With a utility now charging US$0.12/kWh, its levelized rate is US$0.192/kWh. To match that, requires an overnight capital cost of US$5480/kW. So if AlanInAZ can acquire installed solar PV for just US$4600/kW, he is obviously better off. But the current average price is too high for this assumed utility rate.

      Thanks again for the assistance!

      • AlanInAz says:

        By average I assume you mean the $6.2/watt. I am sure that current installs in Tucson for rooftops is lower than my $4.6/watt cost, which is now one year old. Leasing seems to be the new big thing here. Our local utility sold out its annual solar subsidy program last month, largely because of leasing volumes. As a homeowner I did not pay $4.6/watt because of subsidies and tax credits. My net cost after incentives and tax credits was about $1.00/watt.

      • AlanInAz says:

        I should mention that subsidies have been reduced by $1.00/watt since I installed my system and will go lower next year.

      • BlueRock says:

        > I’m willing to go to 25 years, but not longer, for the life of a solar PV system.

        * How long do solar electric PV panels last? “…a PV installation should produce electricity for 30 years or longer.” http://info.cat.org.uk/questions/pv/life-expectancy-solar-PV-panels

        * Testing a Thirty-Year-Old Photovoltaic Module. “…[the] module is still performing to factory specifications — or perhaps a little better. … shows no signs of browning, electrical corrosion, or water intrusion. It certainly looks as if it’s ready to perform for another decade or two.” http://www.greenbuildingadvisor.com/blogs/dept/musings/testing-thirty-year-old-photovoltaic-module

  17. Dr.A.Jagadeesh says:

    Yes. Solar cost reductions are rapid since 1998. In 12 years the cost has come down nearly half!

    Dr.A.Jagadeesh Nellore(AP),India
    Wind Energy Expert
    E-mail: anumakonda.jagadeesh@gmail.com

  18. sherry says:

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  19. sherry says:

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