The following chart and analysis is an excerpt from the recently released Q2 2013 U.S. Solar Market Insight report produced by GTM Research and SEIA.

California’s PV market has seen continued growth amidst the dwindling incentives offered by the California Solar Initiative.

Q2 2013 ranks as the strongest second quarter in the state’s history, with installations up 78 percent in the residential market and 26 percent in the non-residential market year-over-year. For residential and non-residential projects, higher retail rates have enabled project developers to secure a growing number of customers based purely on net metering (NEM), the federal 30 percent Investment Tax Credit, and accelerated depreciation.

FIGURE: California PV Installations by Market Segment, Q2 2011-Q2 2013


In the residential market, PG&E and SDG&E are both no longer accepting CSI applications for residential projects. On the non-residential side, rebates remain available at levels ranging from $0.025 to $0.044 per kilowatt-hour for commercial projects and $0.088 to $0.15 per kilowatt-hour for government/nonprofit projects, depending on the utility. Despite healthy rebate levels across all investor-owned utilities (IOUs), the next chart shows that a significant number of non-residential PV systems were installed this quarter without a CSI rebate, even though SCE and SDG&E have yet to reach the final CSI step.

Outside of the CSI program, LADWP suffered from regulatory uncertainty and a freeze on non-residential incentives. Non-residential incentives in the LADWP program reached their limit eleven months ago, and a new program was only established this July. This has effectively frozen non-residential deployment in the utility’s territory, with non-residential installations dropping 96 percent on a quarter-over-quarter basis in Q2 2013. Also, installers noted that lengthier permitting processes with the LADWP relative to the state IOUs has contributed to a slowdown in both residential and non-residential installations within the LADWP service area.

FIGURE: CSI-Funded vs. Non-CSI Funded Installations in Investor-Owned Utility Territories, 1H 2013

The following trends are likely to emerge in the second half of 2013:

  • Incremental growth in residential installations as CSI incentives officially end
  • A spike in non-residential installations in Q4 and then normalization of demand after installers rush through projects to take advantage of remaining CSI incentives

For more, download the free twenty-page executive summary.

Don't miss the annual U.S. Solar Market Insight Conference in San Diego this year. The two-day event will take place December 10-11, 2013 and feature speakers from FERC, NRG Solar, SEIA, GTM Research, Jinko Solar, and more.