Decreasing prices for solar power equipment coupled with increased government incentives has set the scene for the USA solar power market to skyrocket over the next ten years.
According to Bloomberg New Energy Finance, solar photovoltaic and solar thermal power technologies could provide 4.3% of the nation’s electricity capacity by 2020 – however, this assumes that the solar industry can attract an estimated USD $100bn of investment.
The US currently only has 1.4 gigawatts of installed solar power capacity, putting it at number 5 globally. Bloomberg says this could shoot up to 44 gigawatts by 2020. Large-scale solar thermal projects are projected to increase from a current 0.4 gigawatts to14 gigawatts by that year and for photovoltaics (e.g. solar panels), the group anticipates a 34% annual growth rate to 30 gigawatts by 2020.
Bloomberg New Energy Finance says the cost of a typical solar panel has decreased by more than half in the USA over the past two years. The group says solar power is still expensive compared to other power sources, but that tax credits, grants, generation incentives (feed in tariffs) and renewable electricity credits will remain a driving force behind solar uptake for at least the next three years.
The motivation for investment is compelling. Bloomberg New Energy Finance estimates that commercial-scale solar farms based on photovoltaics can obtain unlevered returns of 8-14% in states such as Hawaii, Texas, New Jersey, and Massachusetts.
By 2020 over 3% of commercial rooftops are forecasted to have rooftop solar power systems installed if current incentives are maintained and home solar power systems to have been installed on 2.4% of US houses by the same year.
“Policy, rather than sunshine, will remain the US’s greatest solar resource for the next few years,” said Milo Sjardin, Bloomberg New Energy Finance’s US head of research; who also stated that after a few more years of support the engine of unsubsidised competitiveness will take over. After that point, “the world will never be the same”.
