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Solar photovoltaic technology will hold its spot as the fastest-growing technology in the U.S. energy industry for the next four years, according to new research from Frost & Sullivan. The prices of solar modules have been in a free fall since 2008, accelerating PV systems' commercialization, while encouraging the development of new financing models for the residential sector.

According to the report, the U.S. PV market earned revenues of more than $1.73 billion in 2011 and could reach $3.04 billion in revenues in 2016.

The cumulative number of PV solar installations in the U.S. reached 4,450, which generated 1,855 MW of solar power in 2011. The residential segment accounted for 15.2% - or 282 MW - of the annual installations during 2011, and is projected to grow at a compound annual growth rate of 11.9% from 2011 to 2016.

Prices have decreased by almost 50% since 2008 on the back of the economic downturn, the resulting lower demand for solar energy and an increased supply of polysilicon. Prices will continue to decline - albeit at a lower rate - in the next four years, due to economies of scale and technological improvements, making solar energy more affordable to residential customers, Frost & Sullivan says.

"New financing methods, such as solar lease programs and power purchase agreements, are diminishing the main barriers to solar system installations," notes Georgina Benedetti, senior industry analyst at Frost & Sullivan. "These barriers include high up-front costs and complex installation and maintenance."

However, the PV market also experienced significant supply-demand imbalance throughout the value chain in 2011. Most solar module manufacturers reduced prices, decreased margins and, in some cases, closed manufacturing facilities.

Furthermore, according to the report, the expiration of the U.S. Department of the Treasury's 1603 cash-grant program is expected to affect new system installations, especially beyond March.

PV module suppliers could increase the uptake of their products in the residential sector by providing a one-stop shop for all solutions - from engineering design to installation and maintenance to government grant paperwork.

"In the last two years, the expanded manufacturing capacity in the solar industry, in combination with technological improvements, has lowered the wholesale module prices, making solar panels reasonably priced," says Benedetti. "Moreover, the escalating competition from low-cost Chinese companies is compelling U.S. manufacturers to focus on improving quality and efficiency, while simultaneously reducing costs, to stay afloat."

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