Why the solar industry is booming while the wind business faces tough year

By Todd Woody
December 17, 2010

RTR2GMCH.jpgThese days there’s not a lot of industries that can report booming growth year after year (the one-company juggernaut that is Apple excepted). But it’s blue skies for the photovoltaic industry, according to a new report showing that solar installations in the United States are expected to have grown 62 percent in 2010 from the previous year.

The survey released by the Solar Energy Industries Association and GTM Research found that as of the close of the third quarter, 530 megawatts of photovoltaic modules had been installed so far this year, 22 percent more than the total for 2009.

“Early fourth-quarter data suggests that there will be a late-year surge in installations, resulting in total 2010 demand of 855 MW, well above the current pace,” the report’s authors wrote.

And there’s plenty of room for further growth. The U.S. in 2009, for instance, accounted for just 6.5 percent of global photovoltaic demand.

And solar is far from a national industry at this point. In the third quarter of this year, five states ­– California, New Jersey, Florida, Arizona, and Colorado – created 74 percent of the demand in the U.S., according to the report.

The U.S. remains a minor power when it comes to photovoltaic manufacturing, with just 330 megawatts’ worth of solar modules rolling off assembly lines in the third quarter, a six percent increase from the second quarter. The top seven Chinese manufacturers, in contrast, have built a capacity of 6,445 megawatts.

Meanwhile, the U.S. wind industry is ending 2010 in the doldrums.

“The U.S. wind energy industry just experienced its slowest quarter since early 2007,” the American Wind Energy Association said in its third quarter report, noting wind turbine installations had fallen 72 percent so far in 2010.

So why has solar thrived while wind has been blown off track?

In part, it’s due to the different markets the two industries pursue as well as the policies and incentives available to developers and customers.

While large-scale solar power plants will be coming online over the next few years, most of the nation’s solar installations are found on residential or commercial rooftops and receive a variety of state and federal incentives.

You won’t find many wind turbines in suburban backyards, on the other hand, and wind farms tend to be massive installations that sell electricity to utilities under long-term contrasts.

Financing for multibillion-dollar projects dried up during the recession and remains precarious. Developers are dependent on federal tax incentives whose expiration and renewal have subjected the wind industry to boom-and-bust cycles. Plummeting natural gas prices over the past two years have also made wind less attractive to utilities.

But Congress on Friday did offer both industries an early holiday present when it extended until the end of 2011 a Treasury program that gives cash grants to developers that cover 30 percent of the cost of big renewable energy projects.

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