U.S. Solar Market Doubles in 2011, Expected to Grow Further

by Trefis Team
+24.38%
Upside
54.75
Market
68.10
Trefis
FSLR
First Solar
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Solar installations in the U.S. more than doubled in 2011 as residential and utility customers installed 1,855 MW of panels. [1] The U.S. market for solar panels is growing on the back of falling equipment prices and a number of large utility projects developed by a number of installers such as First Solar (NASDAQ:FSLR) and Suntech Power (NYSE:STP).

Installers spent around $8.4 billion on projects with installations costs falling by 20% in 2011, according to a report by GTM Research and Solar Energy Industry Association (SEIA). [2] Non-residential projects rose by 28% last year, while residential installations increased by 13%. We are looking to revise our $53.73 price estimate for First Solar, which is almost double its current market price.

Click here for our full analysis of First Solar.

Growing U.S. Solar Market

The U.S. is becoming an increasingly important market for solar panels over the past couple of years as the cost of installing capacity has come down significantly. The U.S. is now the world’s fourth largest market for solar equipment, according to analysts. [1] However, the industry is still dependent on subsidies to be competitive with conventional sources of electricity.

The GTM report also paints an optimistic picture on the future of solar industry in the country, estimating that solar demand could grow by as much as 35%-50% in 2012, mainly because some of the large utility projects are under progress.

Installations are also set to rise as the effects of falling module prices take effect. Panel manufacturers are pinning their hopes on rising demand from markets such as the U.S. and China to compensate for declining sales from traditional European markets.

First Solar has been focusing on its installations business to overcome the difficult situation in the panels market. The company is presently involved in multiple large-scale projects including two 55o MW plants. [1] Large utility companies such as Mid-American, a subsidiary of Berkshire Hathaway, are showing more interest in solar electricity, and companies are eager to invest in solar projects, especially those with backing from the U.S. Treasury program.

Overall, utility scale plants with a total capacity of 3,000 MW are presently under construction in the country and other projects totaling 6,000 MW in capacity are in the early phases of development.

Our forecast for First Solar’s installations business projects a strong growth that may help the company overcome the weak margins environment in the panel manufacturing and sales divisions.

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Notes:
  1. Solar power growth jumps to new record, Reuters [] [] []
  2. U.S. Solar Market Insight: Third Quarter 2011 Report is now available, GTM Research []
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