US Solar Market Insight Report Q3 2012

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U.S.SOLAR MARKET INSIGHT
REPORT | Q3 2012 | EXECUTIVE SUMMARY

U.S. Solar Market InsightTM Introduction

1. Introduction

Despite some manufacturing plant closures and capacity reductions, the global solar industry
remains in a state of heavy oversupply as the end of 2012 approaches. PV module manufacturing
capacity will stand at roughly 70 GW1 at year’s end, while global demand is estimated at 31 GW.
These manufacturing woes have coincided with (and, to an extent, fueled) booming solar demand
in the U.S., where domestic PV installations more than doubled in 2010 and again in 2011. In
2012, we forecast a growth rate of 70 percent – still much higher than the 14 percent rate of
expected global market growth.

As the numbers throughout this report show, the U.S. solar market is still booming. Residential
and commercial installations were strong in the third quarter of 2012, and many large utility solar
projects are expected to come online in the fourth quarter. Still, the picture is not entirely rosy for
all downstream players in the U.S. A number of currently expanding markets (e.g.
Massachusetts) are headed for a downturn in 2013, while other historically booming markets (e.g.
New Jersey) are midway through a correction period. Successful installers, developers, and EPCs
will be able to navigate the choppy waters of these markets, but success will require a deep
understanding of near-term market dynamics and other unique requirements needed to play
in each territory.

GTM Research forecasts that 3.2 GW of PV will be installed in 2012, up from 1.9 GW in 2011.
Given this growth, U.S. share of global installations will rise to over 10% from 7% in 2011 and
less than 5% in 2010. GTM Research also expects that at least 21 individual states will install
over 10 MW of PV in 2012, up from only four in 2008.

1
All capacity figures are reported in direct current (DC) unless otherwise stated

© Copyright 2012, SEIA/GTM Research │2


U.S. Solar Market InsightTM is a quarterly publication of the Solar Energy Industries
Association (SEIA)® and GTM Research. Each quarter, we survey nearly 200 installers,
manufacturers, utilities, and state agencies to collect granular data on photovoltaic (PV) and
concentrating solar power. These data provide the backbone of this Solar Market Insight TM report,
in which we identify and analyze trends in U.S. solar demand, manufacturing, and pricing by
state and market segment. We also use this analysis to look forward and forecast demand over the
next five years. As the U.S. solar market expands, we hope that Solar Market InsightTM will
provide an invaluable decision-making tool for installers, suppliers, investors, policymakers and
advocates alike.
* References, data, charts or analysis from this Executive Summary should be attributed to the SEIA/GTM Research U.S.
Solar
Market Insight.
* Media inquiries should be directed to Nick Rinaldi (rinaldi@gtmresearch.com) at GTM Research or to Monique Hanis
(mhanis@seia.org)
or Jamie Nolan (jnolan@seia.org) at SEIA.
* All figures sourced are from GTM Research. For more detail on methodology and sources, visit
www.gtmresearch.com/solarinsight.

KEY FINDINGS

Photovoltaics (PV)
 PV installations totaled 684 MW in Q3 2012, up 44% over Q3 2011 2
 The residential market grew 12% over Q2 2012 and had its largest quarter in history
 The non-residential market grew 24% over Q2 2012, thanks primarily to growth in California
and Massachusetts
 There is now a total of 5.9 GW of PV operating in the U.S. from over 271,000 installations
 We expect record installations in Q4, leading to 70% annual installation growth in 2012 on 3.2
GW installed

Concentrating Solar Power (CSP and CPV)
 All phases of BrightSource’s Ivanpah project are expected to come online in 2013
 Abengoa’s Solana Generating Station is over 75% complete and expected to be online in
summer 2013
 SolarReserve continues PPA discussions with Tri-State and Xcel for its 200 MWac Saguache
project in Colorado
 The California Public Utilities Commission (CPUC) unanimously approved an amended PPA
for BrightSource’s Sonoran West project

2
To ensure the upmost accuracy, each quarter new data is added to the U.S. Solar Market Insight reports,
thus reported
figures may not match those of previous iterations



AUTHORS
GTM Research Solar Analysts:
Shayle Kann, Vice President, Research
Shyam Mehta, Senior Analyst
MJ Shiao, Senior Analyst
Andrew Krulewitz, Solar Analyst
Carolyn Campbell, Solar Analyst
Scott Burger, Solar Analyst
Nicole Litvak, Research Associate

SEIA Policy and Research Division:
Tom Kimbis, Vice President, Strategy and External Affairs
Justin Baca, Senior Research Manager
Will Lent, Research & Policy Analyst
Shawn Rumery, Research Associate



Figure 1.1 Q3 2012 State PV Installation Rankings
Rank Rank State Installations, Installations,
(Q2 2012) (Q3 2012) Q2 2012 Q3 2012
1 1 California 222 194
2 2 Arizona 192 192
3 3 New Jersey 103 69
6 4 Massachusetts
4 5 Nevada
14 6 Maryland
5 7 Texas
8 8 North Carolina
9 9 Hawaii
15 10 Pennsylvania
13 11 Colorado
11 12 New York
19 13 Florida
16 14 Oregon
Underlying Data Available
18 15 Ohio
in the Full Report
7 16 Illinois
26 17 Vermont
20 18 Missouri
22 19 Connecticut
10 20 New Mexico
21 21 Washington
12 22 Tennessee
17 23 Georgia
23 24 Delaware
25 25 Washington DC
24 26 Wisconsin
Total 775 684


U.S. Solar Market InsightTM Photovoltaics (PV)

2. Photovoltaics (PV)
Photovoltaics (PV), which convert sunlight directly to electricity, continue to be the largest
component of solar market growth in the U.S.

2.1. Installations
The U.S. installed 684 MW in Q3 2012. This represents a 12% decline from Q2 2012 but 44%
growth over Q3 2011. As always, it is important to take the utility market out of the equation
when seeking meaningful conclusions within quarterly installation figures, as the utility market is
simply too volatile and dependent on individual projects. In this context, Q3 was quite strong,
with 20% quarter-over-quarter growth in the distributed generation (DG) market. Both the
residential and non-residential markets grew over Q2 in more than half the states we track.

Through the first three quarters of the year, the U.S. installed a total of 1,992 MW – more than
the 2011 annual figure. Still, in order for the market to reach the 3.2 GW we forecast for the year,
the fourth quarter will have to be, relatively speaking, enormous. For context, the largest quarter
in the history of the U.S. market was Q4 2011, during which 792 MW of PV were installed.
Meanwhile, our forecast calls for 1,202 MW to be installed in the fourth quarter of this year.

Figure 2.1 U.S. PV Installations by Market Segment, Q1 2010-Q3 2012
900

793.1
800 775.1

684.0
700

600
533.3
Installations (MWdc)

500 474.7

400
348.5 341.4

300 277.7

200 179.6 178.6
141.8

100

0
Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Residential Non-Residential Utility



Figure 2.2 U.S. PV Installations by Market Segment, 2011-Q3 2012
500

450

400

350

300
Installations (MWdc)

250

200

150

100

50

0

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Residential PV installations continued to grow incrementally in Q3 2012. In each of the last five
quarters, residential installations have grown between 3% and 21% on a national level, which
Note: Historical and
makes the residential sector by far the most stable segment in the U.S. market. California led the
forecasted installation
way in Q3 2012 with 52.4 MW installed, up from 46.4 MW in Q2 2012. Second-tier residential
figures by state and by
markets also generally had a strong quarter, with expansion in Arizona, Hawaii, and Colorado.
market segment, as well as
The one exception was New Jersey, where residential installations declined along with the rest of
state-by-state market
the market. Third-party owned residential PV systems continue to far outnumber direct purchases
analysis, are available in
by homeowners in mature markets.
the full report
After a weak Q2, the non-residential market bounced back in Q3 2012 with 24% quarterly
growth. This is particularly impressive given that New Jersey (formerly the largest non-
residential market in the country) dropped by 24 MW in Q3. States with notable growth in Q3
included California and Massachusetts. As with other market segments, the non-residential
market tends to trend upward in the fourth quarter of each year as installers rush to complete
projects within a calendar year. We expect this to remain true in 2012, particularly in California,
Arizona, and Massachusetts.



There were 21 utility projects (or phases of projects) completed in Q3 2012 ranging in size from
300 kW to 115 MW. Most notable among these were phases of some of the largest projects in
development – Agua Caliente in Arizona and California Valley Solar Ranch in California. There
are currently 2.1 GWdc of utility PV projects operating in the U.S. as compared to 10 GW of
projects with PPAs that are not yet operating. Of this 10 GW, fully 3 GW comes from the ten
largest projects in construction, all of which will be selling power to utilities in California. The
imbalance between completed and late-stage development projects will result in significant
installation growth figures in the 2012-2014. However, new utility PPA procurement is down and
developers are having a harder time finding buyers than they did even one year ago. We expect
this to have a meaningful impact on installations in 2015-2016, which is why our forecast for the
utility market shows slowing growth in the out years.



Figure 2.3 State-Level Installations, Q3 2012



2.2. Installed Price
Figure 2.4 Average Installed Price by Market Segment, Q1 2011 – Q3 2012
$9.00

$8.00
Q3 Price Range

$7.00

$6.00
Installed Price ($/Wdc)

$5.00

$4.00

$3.00

$2.00

$1.00

$0.00
Residential Non-Residential Utility Blended

Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012

Quarter-over-quarter, the national weighted-average system price rose by 3.2%, from $3.45/W to
$3.56/W. Year-over-year, average installed costs declined by 19.3%. This capacity-weighted
number is heavily impacted by the volume of utility-scale solar installed in a given quarter, of
which there was substantially more installed in Q2 2012 compared to Q3 2012. Within each
market segment individually, average installed prices were down across the board. It should be
noted that prices reported in this section are weighted averages based on all systems that were
completed in Q3 across all locations.

 RESIDENTIAL system prices fell 4.4% from Q2 2012 to Q3 2012, as the national
average installed price dropped from $5.45/W to $5.21/W. Year-over-year, installed
costs declined by 15.3%. Installed prices came down in all major residential markets—
California, Arizona, New Jersey, Massachusetts, and Colorado—and it was not
uncommon for final installed prices to be in
the $4.00/W range.

© Copyright 2012, SEIA/GTM Research │ 10


 NON-RESIDENTIAL system prices fell 3.0% Q/Q, from $4.31/W to $4.18/W. Year-
over-year, installed costs declined by 14.7%. SREC states, such as New Jersey and
Massachusetts, helped to drive down the overall national price. For projects in excess of
100 kW, final project prices were consistently in the $2.25/W-$2.75/W range, which
leaves limited margins for developers and installers. California also experienced a
significant price decrease, helping installation figures rebound from a weak Q2 2012.

 UTILITY system prices once again declined Q/Q, dropping from $2.60/W in Q2 2012
to $2.40/W in Q3 2012. Year-over-year, installed prices fell by 30.4%. First Solar,
which has very low turn-key costs, brought a large majority of new utility capacity
online in Q3, helping to drive
down the average.

2.3. Component Pricing
Pricing for polysilicon and PV components remained soft in Q3 2012 due to the persistence of the
global oversupply environment that the industry has faced since early 2011. Blended polysilicon
prices declined by 15% to $22/kg. Blended module ASPs for Q3 2012 were down to $0.75/W, a
staggering 43% lower than Q3 2011 levels of $1.32/W. As the International Trade Commission
(ITC) has issued its final decision in the antidumping (AD) and countervailing duty (CVD)
investigations against Chinese c-Si cell manufacturers, GTM Research maintains that tariffs will
not have a material impact on pricing in the U.S. Many manufacturers continue to obtain U.S.-
bound cells via tolling from Taiwan with an estimated cost impact of less than $0.10/W. This
does not necessarily prohibit Chinese manufacturers from pricing modules below their domestic
competitors. Coupled with the U.S. AD/CVD decision, the outcome of the trade dispute in
Europe may have a greater impact on U.S. supply than the U.S. decision alone.



Figure 2.5 U.S. Polysilicon, Wafer, Cell, and Module Prices, Q4 2011-Q3 2012
$1.40 $60.00

$1.20
$50.00

$1.00
$40.00

Polysilicon Price ($/kg)
Component Price ($/W)

$0.80

$30.00

$0.60

$20.00
$0.40

$10.00
$0.20

$0.00 $0.00

Polysilicon Wafer Cell Module

This edition also marks the beginning of our coverage of pricing and market dynamics for PV
balance of systems, starting with PV mounting structures. Factory gate pricing for PV mounting
structures differ heavily depending on market segment, configuration, layout and project size,
which can complicate an “average” cost. For example, manufacturers reported costs for the third
quarter for commercial systems anywhere between $0.24/W to $0.35/W. For simplicity, we note
that the values reported below reflect the mounting structure-only costs of the following system
types:

 Residential Rooftop – 7.5kW – 10kW sloped roof in California using a penetrating rail-
based system
 Commercial Rooftop – 100 kW – 500 kW flat roof ballasted system in California requiring
no additional structural support
 Ground Mount Fixed Tilt – 1 MW – 5 MW fixed tilt ground mount system in California,
not including foundation structures
 Ground Mount Tracking – 5 MW – 10 MW one-axis tracker in California not including
foundation structures



Even with these baselines, note that PV mounting structure purchasers should consider the full
implied cost of individual manufacturers rather than relying on quotes versus the national
average. Differences in racking materials and design have different implications for labor costs,
grounding requirements and additional structural support.

Figure 2.6 U.S. Mounting Structure Pricing by End Market and Quarter, Q3 2012
$0.50

$0.45

$0.40

$0.35

$0.30
dc

$0.25
$/ W

$0.20

$0.15

$0.10

$0.05

$0.00
Residential Rooftop Commercial Rooftop Ground Mount Fixed Tilt Ground Mount Tracking

Q3 2012
Residential Rooftop $0.43
Commercial Rooftop $0.32
Ground Mount Fixed Tilt $0.18
Ground Mount Tracking $0.24

2.4. Market Outlook
This quarter we have overhauled our installation forecasts. Instead of providing three demand
scenarios as we have in the past, we now focus on providing a single forecast with significantly
increased detail. Specifically, we will be adding forecasts by state, by market segment, as well as
including rolling quarterly forecasts – all of which are available in the full report.



Historically, the fourth quarter has been by far the largest for PV installations in the U.S. In 2010
and 2011, the fourth quarter represented 41% and 42% of all annual installations, respectively.
We expect a similar, albeit slightly lower, fourth quarter bump in 2012 with 1,202 MW installed,
or 38% of the annual total. To be sure, much of this forecast hinges on the timely completion of a
number of utility-scale projects currently in the late stages of construction. But we do expect
growth across all market segments.

Apart from the utility sector, Q4 developments in Massachusetts and California are worth noting.
Specifically, we are expecting to see 40 MW of non-residential installations in Massachusetts
over that time frame, while the California forecast calls for 60 MW in residential installations.
We anticipate a continued downturn in New Jersey and Colorado, but robust growth in Hawaii
and Arizona.

Figure 2.7 PV Installation Forecast, 2010-2016E
10,000

9,000

7,848
8,000

7,000 6,537
Installed Capacity (MW)

6,000
5,380

5,000

3,980
4,000
3,194
3,000

1,884
2,000

848
1,000

-
2010 2011 2012E 2013E 2014E 2015E 2016E


Our overall forecast for U.S. PV market growth has largely remained steady this quarter, with 3.2
GW expected in 2012 growing to nearly 8 GW in 2016. However, there is one significant
revision within our market outlook. In the out years of the forecast (2015-2016) our estimate of
utility PV installations has decreased, while the residential and non-residential forecasts have
been increased. As a result, we expect the distributed generation sector to regain some of the
market share it has been losing beginning in 2015, if not earlier.



Figure 2.8 PV Market Segmentation, 2008-2016E
100%

90%

80%

70%
Installed Capacity (MW)

60%

50%

40%

30%

20%

10%

0%
2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E


Note: Installation forecast by state available in the full report


U.S. Solar Market InsightTM Concentrating Solar Power

3. Concentrating Solar Power
While there was no additional concentrating solar capacity installed in Q3 2012, there were
significant developments within the market:
 All phases of BrightSource’s Ivanpah project are expected to come online in 2013

 Abengoa’s Solana Generating Station is over 75% complete and expected online in
summer 2013
 PPA discussions continue with Tri-State and Xcel for the 200 MWac Saguache project
in Colorado
 The California Public Utilities Commission (CPUC) unanimously approved an amended
PPA for BrightSource’s Sonoran West project

Figure 3.1 Select Concentrating Solar Project Development Highlights
Project State Technology Capacity Expected Project Status Update
(MWac) Completion
Solana Generating AZ CSP 280 2013 Installation 75% complete; expected online
Station Summer 2013
Ivanpah CA CSP 392 2013 Unit 1: Successfully aimed first 3 heliostats at Unit
1 boiler; on track to begin hydro-testing; more than
49,000 pylons and heliostats installed
Units 2 & 3: More than 63,000 pylons and 26,000
helio stats installed
Genesis Solar CA CSP 125 2013 Flooding damaged 35 sections of mirrors, creating
Energy Project-1 ~$3M in damage and extended project timeline
Crescent Dunes NV CSP 110 2013 BATZ Energy selected to supply sandwich panels
Solar Energy for heliostats
Project
Palen Solar CA CSP 500 2014 CEC approves ownership transfer to BrightSource
Abengoa Mojave CA CSP 280 2014 Installation 30% complete
Solar (AMS)
Saguache CO CSP 200 2015 PPA discussions with Tri-State and Xcel, but
no commitment
Rio Mesa 1 CA CSP 250 2015 CPUC voted to deny cost recovery for SCE PPA
based on price and value comparison
Siberia 1 & 2 CA CSP 400 2016 CPUC voted to deny cost recovery for SCE PPA
due to transmission uncertainty and interference
with nearby military training operations
Sonoran West CA CSP 200 2017 CPUC unanimously approved amended PPA
ASU CPV Project AZ CPV 1 2012 SunPower driving piers into ground
SunPower C7 AZ CPV 6 2013 PPA with Tucson Electric Power; will begin
Project construction in first half of 2013; online Q4.


Q4 Q3 Q2 Q1 Q1 Q2 Q3 Q4 Q4 Q3 Q2 Q1

Q4 Q3 Q2 Q1 Q1 Q2 Q3 Q4 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q2 Q3 Q4 Q4 Q3 Q2 Q1 Q1 Q2 Q3 Q4

SEIA® and GTM Research Deliver the Most FULL REPORT
Comprehensive U.S. Solar Market Analysis
and Industry Data Available Today. NEW JERSEY
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U.S. Solar Market Insight™ brings high-quality, solar- PENNSYLVANIA NEW YORK
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These reports present market conditions, opportunities Q3 38.3 Q3 3.6

and outlooks for the photovoltaics (PV) and concentrating
solar power (CSP) markets in the U.S. Primary data for the › Installations by market › Component pricing across
segment for the top 20 the value chain
reports is collected directly from installers, manufacturers, states › Manufacturing capacity &
state agencies and utilities. That data is analyzed to provide › Installed cost by market production by component
comprehensive upstream and downstream analysis on segment for each state by state

installations, costs, manufacturing, and market projections. › State-by-state market › Demand projections to
analysis 2016 by technology, market
segment & state
U.S. Solar Market Insight™ is offered quarterly in two
versions– Executive Summary and Full Report. The Executive
Summary is free, and the Full Report is available individually
each quarter or as part of an annual subscription. EXECUTIVE SUMMARY

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› National aggregate › National weighted average
www.gtmresearch.com/solarinsight OR capacity additions installed price

www.seia.org/cs/research/solarinsight › National aggregate › National aggregate
number of installations manufacturing production

Please find a more detailed content and pricing matrix on the reverse side of this page.
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TABLE OF CONTENTS

PHOTOVOLTAICS (PV) WHO BUYS US SOLAR MARKET INSIGHT?

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Subscribers to U.S. Solar Market Insight include:
By Market Segment
By State
By Ownership Structure
Installed Price Component Manufacturers
Manufacturing
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Wafers
Cells
Technology Firms
Modules
Inverters
Component Pricing
System Integrators
Polysilicon, Wafers, Cells and Modules
Inverters
Demand Projections
By Market Segment Project Developers
By State

Utilities
CONCENTRATING SOLAR POWER (CSP)

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US Solar Market Insight Report Q3 2012

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