Residential installations of rooftop photovoltaic (PV) panels in the U.S. led the solar power market in the first quarter of this year, posting a record sequential 11% growth rate. That's the largest such uptick in history.
Residential systems were up 76%, compared with the first quarter of 2014, according to a U.S. Solar Market Insight report released today.
In all, the U.S. solar market saw just over 1.3 gigawatts (GW) of capacity installed in the first quarter, according to the report. It was the sixth consecutive quarter that solar power capacity in the U.S. grew by more than 1GW.
"We forecast that PV installations will reach 7.9GW in 2015, up 27% over 2014," the report stated.
Residential solar installation costs dropped to $3.46 per watt of installed capacity this quarter, which represents a 2.2% reduction over last quarter and a 10% reduction over the first quarter of 2014.
The U.S. Solar Market Insight report is a quarterly publication from GTM Research and the Solar Energy Industries Association (SEIA); it's based on data collected from almost 200 utilities, state agencies, installers and manufacturers.
Collectively, more than 51% of all new electric generating capacity in the U.S. came from solar in Q1, 2015. In the first quarter, the residential and utility PV market segments each added more capacity than the natural gas industry brought on line, the report said.
New installations of solar power capacity surpassed those of wind and coal for the second year in a row, accounting for 32% of all new electrical capacity, according to a a report released earlier this year by GTM and the SEIA.
One of the factors spurring growth in solar power is the expiration of the federal government's solar investment tax credit (ITC). That measure, passed in 2008, offered a 30% tax credit for residential and business installations. When it expires in 2016, the tax credit will drop to a more permanent 10%.
Even so, the first quarter of any year tends to be slow for solar installations due to inclement weather in the north as well as for business accounting and tax reasons. That seasonal slowdown was seen in both the commercial and utility solar markets this year, both of which were down quarter-over-quarter from the last quarter of 2014.
Non-residential solar installations saw a 24% sequential downturn and a 3% downturn compared with the first quarter of 2014.
"The non-residential market continues to struggle from longstanding barriers to customer origination and project finance, and it remains more sensitive to state incentive reductions than residential solar," the report said.
The double-digit growth in residential solar systems was particularly notable because nearly one-fourth of the residential solar installations have now come on line without any state incentives. That compares with 2012, when only 2% of residential solar power growth came on line without state incentives.
The uptick in residential solar -- sans state incentives -- is due to a trend with solar power reaching price parity with other forms of energy due to net energy metering and the leasing of third-party-owned systems. Net metering allows PV users to sell back any unused power to utilities.
"The residential juggernaut will continue to roll on, while the non-residential market will pick up, particularly in California and New York. And the utility-scale pipeline has reached unprecedented levels ahead of the looming federal Investment Tax Credit expiration," the report stated. "We anticipate another record year for solar in the U.S. in every market segment."
Deutsche Bank analysts believes the cost to finance solar installations will also drop from 7.9% last year to about 5.4% this year. Financing for installations is expected to stabilize at around 6.5% by 2019.
Amit Ronen, director of George Washington University's Solar Institute, was a key Congressional staffer behind the 2008 ITC legislation. Along with the ITC law, one of the driving forces behind adoption of solar power and the ensuing reduction of costs, he said, has been the U.S. Department of Energy (DOE) SunShot Initiative. That effort helps fund research, manufacturing and market creation. SunShot has a goal for solar energy to reach price parity with conventional power sources by 2020.
"They say they're about 60% of the way there because [of solar] panel prices.... They've come down 80% over the past five years," Ronen said in an interview late last year.