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Will a Drop in Prices and New Federal Incentives Stimulate Demand in the California Solar Initiative and the U.S.?

It’s been ten months since the Federal Investment Tax Credit (ITC) was expanded and extended, and six months since the American Recovery and Reinvestment Act of 2009 (ARRA) package arrived. It’s also been ten months since the economy hit the skids.

By Glenn Harris and David Devir, SunCentric

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Print July 24, 2009, 12:09 (CEST)
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Will a Drop in Prices and New Federal Incentives Stimulate Demand in the California Solar Initiative and the U.S.?

SunCentric Business Perspectives

Spain, after its wild 2.5GW ride in 2008, will have what amounts to a “lost year” in 2009 and Germany, the industry’s traditional solar market leader has had a slow start. Due to the poor economy, project financing, the life blood of commercial solar has not flowed at the rate the industry requires. Investors and commercial buyers around the world, and in the U.S. are increasingly interested in solar PV systems, but are reluctant to purchase.

Now midyear, 2009 is shaping up as a year of decline for the solar industry worldwide, or at best a low growth year. Together the markets around the world have been unable to grow at a rate that overcomes this confluence of events.

Increased silicon supply and PV manufacturing capacity has led to an abundance of PV modules and declining margins. Recent informal discussion with some PV manufacturer executives leads us to believe that north of 500MW is now in storage around the world. The combination of lower PV demand and higher PV supply has caused a rapid decline in PV price.

The solar world is watching for signs that changing U.S. policy and more favorable treatment of renewables will start a major U.S. ramp up. If a ramp is going to happen in the near term, California will be the leading indicator. California is at least five years ahead of most of the other states, has more sales and installation capacity than the rest of the U.S. combined and a clear understanding of the financial magic required to get solar deals done.

Against this backdrop, we wondered whether we could find convincing evidence in the California Solar Initiative (CSI) database that price has or is dropping and demand is changing. If there are changes, where do we stand compared to the early CSI solar gold rush days when the program launched in 2007? Can we make a reasonable projections based on developing trends?

Read the full report.

 


Learn more about the Californian PV market.

 

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