The residential solar power market has experienced tremendous growth during the last three years due to rising energy prices and government incentives on solar energy for residential applications. In the United States, the combination of rebates for home solar installation and ability to sell excess solar power through the grid has made solar power-generated electricity affordable and competitive in California and other states that have similar incentives. Retail electricity prices in the United States, which had been stable during the first half of 2010, are expected to grow by approximately 0.6% by the end of the year because of the rising fuel costs for natural gas and coal.

Frost & Sullivan finds that the market earned revenues of over US$1,058.6 million in 2010 and estimates this to reach US$3,420.5 million in 2017. “Solar PV installations in the residential sector are expected to increase at a CAGR of 39% from 2010 to 2017,” said Frost & Sullivan research analyst Georgina Benedetti. “It is estimated that the United States residential solar power market will have 1,410 MW of PV cumulative installed capacity by the end of 2010, an increase of 664 MW over 2009.”

In 2010, the residential solar power market faced challenges, such as over-dependency on government support, competition against other distributed generation technologies and shortage of solar PV modules. The impact of these challenges is expected to reduce in the near future, as demand for solar systems continues to increase and solar capital and energy costs decrease due to expanding manufacturing capacity and technological improvements.

Grid-connected PV systems tend to have higher up-front costs than other conventional energy systems and can take almost 20 years for consumers to recover the installation costs through solar electricity savings. This tends to deter consumers from investing in solar systems. In many cases, adoption of solar PV systems becomes a secondary option. Several other low-cost distributed power generation technologies can satisfy the on-site power requirements of end users.

“A direct threat arises from the proven, low-cost and easily available diesel-fired generator sets used for base power application in many remote areas,” said Benedetti. “However, during the last two years, the expanded manufacturing capacity in the solar industry, in combination with the global financial crisis, led to a decline in wholesale module prices, reducing the impact of this restraint on the market.”

Further Information: Frost & Sullivan (www.frost.com)