But typically large solar states saw a drop in nonresidential installations. | REUTERS U.S. solar installations on rise

The U.S. solar industry continued its healthy growth in the first quarter, according to a new industry report out Tuesday.

The U.S. added 723 megawatts of solar power from January through March, up 33 percent from the same period in 2012, according to the report from GTM Research and the Solar Energy Industries Association.


That figure accounts for nearly half of all the new electric capacity installed in the first quarter.

Both the utility-scale solar and residential solar sectors saw big year-over-year growth. The amount of utility-scale projects that came online more than doubled over 2012’s first quarter, while the residential market rose 53 percent over the same period and even climbed 11 percent from the fourth quarter, typically the busiest period for new installations.

The nonresidential solar market, however, saw a 20 percent decrease both from the previous quarter and the previous year.

The report projects overall growth in the sector for all of 2013, but a decrease in state-level incentives hit nonresidential projects the hardest in the first quarter.

Typically large solar states, including California, Arizona and Massachusetts, saw a drop in nonresidential solar installations. The only major state to see nonresidential growth in the first quarter was New Jersey, where installations climbed by 50 percent over the fourth quarter.

Utility-scale solar has yielded some big installation figures in recent years, but the sector is relatively volatile thanks, in part, to wavering government incentives and impacts that very large projects can have on the data.

GTM projects that the relatively stable growth in residential and nonresidential solar — together known as distributed solar — will be a key driver in coming years.

“Distributed solar looks increasingly very, very attractive in the U.S. for the next few years, especially if you remove any artificial constraint that used to be provided by state-level incentives, and you say the market will continue to grow even in the absence of these incentives, at least in some cases,” said Shayle Kann, vice president for research at GTM.

He pointed to California, which installed 13.2 megawatts of residential solar that didn’t fall under the state’s major solar incentive, though they were eligible for the federal investment tax credit, the industry’s primary federal incentive.

The shift was caused largely by the expiration of the incentive in some areas. The incentive also declined over time, making applications submitted later more costly than the return earned from the program.

Some installers can construct systems that are economically beneficial with just the federal investment tax credit — and the big installation figure, which accounts for around 3,000 individual systems, is an early indicator that solar can survive without state-level incentives, according to Kann.

“If you assume that, then the potential through 2016 at least is enormous,” he said. “That has led to this discourse around how utilities are going to deal with increasing penetration of distributed generation.”

Some of the problems presented by distributed solar include net metering issues, rate structures and obtaining financing for the growing sector.

Overall, the U.S. is on track to add 5.3 gigawatts of solar capacity in 2013, according to the report. That’s a huge gain for solar power, which at the end of 2012, had about 7.2 gigawatts of installed capacity.