Cost barriers to solar installations diminishing

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Solar PV will remain the fastest growing energy technology in the U.S. over the next four years, according to Frost & Sullivan.

The research firm estimates the solar PV market will earn revenues of $3.04 billion in 2016, up from $1.73 billion in 2011. Annual installations in the residential sector are projected to grow at a CAGR of 11.9 percent from 2011 to 2016.

Falling prices are driving commercialization. PV prices have gone down by nearly 50 percent since 2008. The prices will continue to decline a bit more slowly in the next four years, due to economies of scale and technological improvements, making solar energy more affordable to residential customers.

"New financing methods, such as solar lease programs and power purchase agreements, are diminishing the main barriers to solar system installations," said Frost & Sullivan Senior Industry Analyst Georgina Benedetti. "These barriers include high up-front costs and complex installation and maintenance."

The market also experienced significant supply-demand imbalance throughout the value chain in 2011. Most solar module manufacturers reduced prices, decreased margins, and, in some cases, closed some manufacturing facilities. Further, expiration of the 1603 grant program is expected to affect new system installations, especially beyond March 2013.

"In the last two years, the expanded manufacturing capacity in the solar industry, in combination with technological improvements, has lowered the wholesale module prices, making solar panels reasonably priced," noted Benedetti. "Moreover, the escalating competition from low-cost Chinese companies is compelling U.S. manufacturers to focus on improving quality and efficiency, while simultaneously reducing costs, to stay afloat."

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