U.S. solar power grew by 6.2 gigawatts in 2014, a 30 percent increase over the previous year and representing nearly $18 billion in new investment, according to data released this morning by the Solar Energy Industries Association and GTM Research.

The new power systems, comprising tens of thousands of photovoltaic (PV) arrays for homes, schools, businesses and utilities, as well as a handful of large concentrated solar power facilities in places like the Mojave Desert, raised the United States' profile as one of the world's leading adopters of solar power, officials said.

But the future for U.S. solar isn't without its bumps.

New installations of nonresidential solar panels, while accounting for more than 1 GW of power, shrank by 6 percent year over year, a condition caused by a variety of factors "ranging from tight economics to difficulty financing small commercial installations," GTM analysts said in their latest "U.S. Solar Market Insight Report."

Meanwhile, the industry's primary federal support—the 33 percent investment tax credit (ITC)—is set to expire at the end of 2016, effectively shifting the cost burden of solar fully to developers and consumers of clean power. And as with other renewable energy resources, solar's future will be affected by the status of state renewable portfolio standards that direct rate-based utilities to produce or acquire a percentage of their power sales from clean energy resources.

Yet, even with those caveats, industry officials and analysts forecast a continued boom in U.S. solar markets over the near term, with a projected 31 percent growth target for 2015. The growth will be fueled by falling costs for solar panels and modules, business model innovation that allows for more flexibility in ownership, favorable political and regulatory environments, and increased access to low-cost capital.

Solar beats wind and coal on key metric

Shayle Kann, senior vice president at GTM Research, noted that in just five years, the U.S. PV market—which does not include concentrated solar plants—has witnessed a fourfold expansion, from an estimated $3 billion in 2009 to $13.4 billion last year.

Moreover, solar accounted for 32 percent of the nation's new generating capacity in 2014, beating out both wind energy and coal for the second consecutive year. Only natural gas constituted a greater share of new generating capacity, according to the report.

"From a high-level national perspective, the market has continued to see really impressive growth," both in established solar markets like California and Arizona and in regions where solar is a relative newcomer, such as in Virginia, the Carolinas, Georgia and Louisiana.

Some of the growth, especially in emerging solar states, was attributable to state incentives for residential and commercial solar, the growing popularity of third-party leases offered by firms like SolarCity and Sunrun, and a desire on the part of large utilities to diversify their fuel portfolios to include renewable energy.

Cory Honeyman, a GTM solar analyst and lead author of the 2014 market report, further noted that "2014 was the year where the concept of retail rate parity became something that extended beyond California to a growing number of other markets."

For example, North Carolina for 2014 was the nation's No. 2 solar state by installations behind California, with 397 megawatts of new solar power coming online. It was followed by Nevada, Massachusetts, Arizona and New Jersey, all of which have well-established solar markets.

Other states rising in the solar ranks include New Mexico, Missouri and Maryland. New Mexico for the first time became a top 10 state for solar development thanks to its 88 MW gain in solar capacity last year.

New York, Texas and Hawaii also each added more than 100 MW of solar capacity in 2014, securing their spots among the nation's solar leaders. Elsewhere in the Southeast, Georgia and Tennessee saw marked increases in utility-scale solar, while Louisiana and South Carolina experienced sustained growth in the residential solar sector, according to GTM.

The U.S. residential sector added 1.2 GW of capacity in 2014, marking its first time surpassing 1 GW, according to GTM. Residential PV continues to be the fastest-growing market segment in the U.S. solar sector, riding three consecutive years of 50 percent or higher annual growth.

The utility sector also remains very strong, adding nearly 1 GW annually over the past several years. In 2014, 3.9 GW of utility-scale PV projects came online in the United States, with an additional 14 GW of projects under contract.

"Today the U.S. solar industry has more employees than tech giants Google, Apple, Facebook and Twitter combined," Rhone Resch, SEIA's president and chief executive officer, said in a statement. That success, he added, has come in part from the 9-year-old investment tax credit for solar power.

"We now have 20 gigawatts of installed solar capacity—enough to power 4 million U.S. homes—and we're helping to reduce harmful carbon emissions by 20 million metric tons a year," Resch said. "By any measurement, the ITC has been a huge success for both our economy and environment."

Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500