It looks as if 2010 will go down as a good year for the solar industry as falling prices helped boost installations.
It was particularly noteworthy for China, which expanded its already major role in the global market with a surge in the manufacturing of solar panels and other renewable energy components.
The Solar Energy Industries Assn., a trade group, said Thursday that commercial solar customers in the U.S. reached 103 megawatts of capacity in the third quarter, a 38% jump from the same period in 2009. Overall, more than 27,000 homes and businesses set up solar-power systems.
And for the first time, the average installation cost fell to less than $6 a watt, according to the group, which partnered with GTM Research on its report. By the end of the year, the U.S. industry might surpass 1 gigawatt of installations, encompassing photovoltaic, concentrating solar power, and solar heating and cooling projects.
California is leading the pack, followed by New Jersey, Florida, Arizona and Colorado.
Globally, demand for photovoltaics alone grew 196% to 10.6 gigawatts in the first nine months of 2010, according to research and consulting firm SolarBuzz. In the third quarter, the industry pulled in $17.9 billion –- a 74% increase from a year earlier.
Next year Asian manufacturers are likely to lead the charge, according to SolarBuzz. In the third quarter, Chinese companies produced 66% of the world's panels, up from a 50% share the year before. Of the 12 top cell manufacturers, Chinese and Taiwanese firms took up eight spots, with JA Solar of China in front.
But as major policy changes take effect in 2011 in Europe, the industry is likely to see growth slowing, even as excess production causes the price of solar modules to plunge 15% next year, SolarBuzz said.
Already in the U.S., the average cost of photovoltaics has fallen 30% to $7.50 a watt in 2009 from $10.80 in 1998, according to a report from the Department of Energy's Lawrence Berkeley National Laboratory.
And costs are still falling steeply this year — about $1 a watt, based on data from 78,000 residential and commercial systems across 16 states.
Though the average size of state and local incentive programs tumbled, federal stimulus funds helped make up the difference. After government help, the average "installed cost" for residential solar systems dropped 24% from 2008 to $4.10 a watt in 2009.