(Reuters) – Suntech Power Holdings Co Ltd expects U.S. solar installations to reach a record 2 gigawatts this year, even as demand from the German market stumbles, a Suntech executive said on Monday.
Solar companies have been betting that the United States could become the world’s largest market in the next few years, replacing Germany in the top spot as Berlin trims subsidies there.
That increase in U.S. installations would more than double the 878 megawatts of solar built in 2010. Suntech’s Chief Commercial Officer Andrew Beebe said with Canada, North America’s market could reach 2.2 or 2.3 GW this year.
The United States was the fourth largest market for solar last year behind Germany, Italy and Japan, and most analysts had forecast 2011 U.S. demand of 1.5 GW to 1.6 GW.
One gigawatt is about the power output capacity of a large nuclear reactor.
Still, the German market has been slower to pick up in the second half of the year than the company had expected, Beebe said.
“Europe is going through a lot of macro issues in terms of finance support, and a lot of people are waiting for a lot of things,” Beebe said in an interview.
“Sometimes they are waiting to see how much lower can panel prices go … other people are waiting to see when can financing stability sort of reenters the world over there,” he said.
The reduction of subsidies in Germany and Italy, the world’s two biggest solar power markets, and rising production of the panels that turn sunlight into electricity have left the industry with a glut of equipment and driven panel prices down by some 35 percent this year.
That has weighed heavily on profit margins for Suntech and its competitors, such as First Solar, Trina Solar and JA Solar Holdings, and driven their shares to multi-year lows. Suntech’s shares have dropped more than 70 percent this year.
With 2.2 gigawatts of module production capacity at its plants around the world, Suntech is the largest producer in the sector.
Suntech is not currently planning to grow that figure, Beebe said, adding that its competitors are likely to re-think any new spending plans.
“I think over the next couple of quarters, you’re going to see companies starting to pull back in terms of capacity expansion,” he said.
The steep drop in module prices should help drive new sales and make the renewable energy source less dependent on subsidies, Beebe said.
Prices for utility-scale projects at the best-suited sites in Arizona are currently being set at 10 cents per kilowatt hour, not including government subsidies, Beebe said. The cost is higher across the state line in California, the largest U.S. solar market.
The price in Arizona makes solar competitive with other power generation sources, such as natural gas, he said.
A year ago developers were quoting new projects at between 14 cents to 16 cents per kilowatt hour.
Some U.S. incentives for the solar industry have expired or are due to expire, and industry analysts have said that financing for new projects in 2012 could be more difficult to obtain.
Beebe said the company does not plan to follow the strategy of First Solar or SunPower Corp and build its own solar power plants, but it will back its customers with financing.
“If our customers want our help, we will do pretty much whatever it takes,” he said.
In the United States, Suntech is supplying modules for Sempra Energy’s 150 megawatt Mesquite Solar 1 project in Arizona. It has already delivered 140,000 panels to the site, or 15 percent of the total, Beebe said.
Suntech will recognize revenue from the Mesquite project over six quarters, Beebe said.
(Reporting by Nichola Groom and Matt Daily in Dallas; Editing by Gary Hill)