California Solar Sales Remain Strong Despite Significant Obstacles

2010 looks like it will go down as a good year for the California solar industry despite major obstacles that have cropped up in the path of renewable energy in the state. The first obstacle earlier this spring, Fanny Mae and Freddie Mac created a rule that pulled the plug on a popular solar financing program, Property Assessed Clean Financing (PACE).

PACE was a creative tool a homeowner could use to secure solar financing and pay it back over a long period through their property taxes. If they solar the home solar system, the loan would stay with the property. Good deal for the homeowner. Good deal for the solar community. Good deal for the local economies which kept the money in the communities. Fanny, Freddie (which means Wall Street) must have felt significantly threatened because they created a rule that said they would not guarantee any home with PACE solar financing attached.

The second challenge, of course, is the economy. “Homeowners that have the resources for a solar installation, but in some cases are keeping a tight fist on their money” said Clifford Boley of Blue Pacific Solar in Sacramento. “You cannot really blame homeowners but solar installers across all of California are working hard to make solar more accessible.” Boley went on to say that it is not uncommon to see a 7 year residential solar payback with returns on investments around 15%. Those numbers make home solar installation one of highest ROI and safest place a homeowner can invest their money.

The 3rd huge challenge was the election. California gave a resounding YES to overcome big oils want to stop the progress of renewable energy in the state. So goes California, so goes the nation. With the election of Jerry Brown, the passion for solar that was started under Governor Schwarzenegger is sure to continue to progress.

Contributing to the success are falling prices that helped boost solar installations. In story by Tiffany Hsu of the LA Times, the solar story 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 of solar companies, said 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 solar installation cost fell to $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 solar installations, encompassing photovoltaic, concentrating solar power, and solar heating and cooling projects.

California is of course leading the pack, followed by New Jersey, Florida, Arizona and Colorado. Globally, demand for photovoltaic alone grew 196% to 10.6 gigawatts in the first nine months of 2010, according to research and consulting firm Solar Buzz. In the third quarter, the industry pulled in $17.9 billion a 74% increase from a year earlier.

Next year, Asian solar manufacturers are likely to lead the charge, according to Solar Buzz. In the third quarter, Chinese companies produced 66% of the world’s solar panels, up from a 50% share the year before. Of the 12 top solar cell manufacturers, Chinese and Taiwanese firms took up eight spots according to the custom report.

But as major policy changes take effect in 2011, the European solar industry is likely to see growth slowing, even as excess production causes the price of solar modules to plunge 15% next year, Solar Buzz said.

Already in the U.S., the average cost of solar 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 this year about $1 a watt, based on data from 78,000 residential solar and commercial systems across 16 states.

Though the average size of state and local solar incentive programs tumbled, federal stimulus funds helped make up the difference. After government help, the average installed cost for residential solar systems dropped 24%.