Is the solar industry as much of a success as it seems? Is it contributing to the energy supply in the United States? Does it have a promising future, or is it a bubble industry inflated by government subsidies and bandwagon investors?
Recent published reports can shed some light on these questions.
How Does the U.S. Solar Industry Stack Up?
The U.S. Solar Energy Industries Association (SEIA) says that the U.S. market share of worldwide solar installations has fluctuated between five and seven percent since 2005.
According to the Solar Foundation’s National Solar Jobs Census 2010, there were 16,703 solar employers in the United States in 2010. Over half of those employers were in the Western U.S. Twenty percent were in the Northeast/Mid-Atlantic region.
Most U.S. solar companies, about 65 percent, are involved in installation. About 50 percent are in wholesale trade and about 25 percent are in manufacturing. On the installation side of the industry, 92.1 percent of solar firms install photovoltaic (PV) systems, 50.6 percent install water-heating systems, and 21.9 percent install space-heating systems. Solar manufacturers tend to be more diversified, with only 64.6 percent making PV systems.
SEIA reports that although the U.S. solar industry imports goods such as PV equipment, polysilicon, and PV feedstock, the industry is in fact a net exporter. The country imports $3.75 billion and exports $5.63 billion, for net exports of $1.88 billion. U.S. solar installations for 2010 had a total market value of $5.96 billion.
The European Photovoltaic Industry Association (EPIA) says 60 percent of U.S. PV solar installations are in California. In such western states, solar irradiation is high. Electric rates there are high as well, so EPIA believes that in those markets “PV will become competitive relatively rapidly.”
Solar’s Place in the Overall U.S. Energy Picture
In 2010, the Solar Foundation surveyed utilities that are active in solar energy. Even in those utilities, solar still makes up a small percentage of their generation profile. Nearly 70 percent said solar was less than one percent of their generation; 11.4 percent said solar was between one and two percent of their energy profile; 10.1 percent of those utilities said solar made up more than 5 percent of their generation. Over 90 percent expected their solar capacity to increase in 2011.
Solar should gain market share as it becomes cost-competitive with conventional energy sources. The Department of Energy (DOE) projects that the cost of PV energy will continue to decline and gain in market penetration over the next two decades, becoming fully competitive for utility generation between 2015 and 2020.
“Green Jobs” in the Solar Industry
One huge positive for the solar industry is that it is creating jobs in the U.S. According to the Solar Foundation, the U.S. solar industry now employs 100,237 Americans, a 6.8 percent growth since August 2010. This compares to growth of only 0.7 percent in the overall economy, and a loss of 2 percent of jobs in fossil-fuel generation.
Reliance of Solar on Government Incentives
In the United States, many states have adopted renewable portfolio standards that require electric utilities to generate certain percentages of their power from renewable sources. This is driving adoption of solar and other renewables in the U.S.
Governments provide funding for solar projects through tax credits or rate-based subsidies, offer financing support for solar purchasers and work with banks to support lending to solar-industry businesses. They also fund research and development in solar technologies.