Why US solar power may have lots of room to grow

If Europe's example counts for anything, the United States has a lot of room to run with solar energy.

Solar power could become the leading global energy source by 2050, according to a recent International Energy Association (IEA) report. And the United States—the world's biggest energy consumer—has a lot further to go in order to get to that point than developed economies in Western Europe do.

"We don't have to wait 35 years," said Pavel Molchanov, solar analyst at Raymond James. "Look at Europe—Germany and Italy. Last year [solar] was almost 10 percent of total power generation. In the United States, we are not even at 1 percent."

Read MoreStrange bedfellows: Solar power meets oil drilling

But it's not all bad being a laggard. The U.S. solar industry is benefiting from the progress that Europe already has made, according to Geoffrey Styles, managing director at energy consulting firm GSW Strategy.

"There's enormous scope for solar growth in the U.S., and enormous technology improvements to be implemented," he said. "Europe has driven costs down by investing heavily in solar and the U.S. stands to benefit a great deal."

SolarCity employees lift solar panels onto the roof of a home in Los Angeles.
Patrick T. Fallon | Bloomberg | Getty Images
SolarCity employees lift solar panels onto the roof of a home in Los Angeles.

As things stand, U.S. solar capacity has more than quadrupled since 2010, according to the U.S. Energy Information Administration.

Some of the major solar companies' U.S.-traded shares have had a big run in the last 12 months. Elon Musk's Solar City is up about 48 percent; First Solar is up roughly the same. But performance varies in the sector—Vivint Solar began trading on the New York Stock Exchange last week, opening at the lower end of its projected IPO price. Shares have since dropped 27 percent.

Read MoreWhy Buffett, Apple and Google love the Mojave Desert

While the western U.S. has been most focused on utilizing solar power, the idea is quickly spreading to other regions including the Northeast. Sales teams are starting to focus more of their attention on the eastern seaboard, Pennsylvania and New England.

Shirley Montalvo, a sales representative for Solar City, said she fields questions about the cost effectiveness of solar power from potential customers from the time she wakes up in the morning until she goes to bed at night.

"We take their energy bill and we look at how much they're spending on energy, then we put together a custom proposal, numbers that make building a system right for them," she said.

Read MoreCheap gas: $3 (and under) a gallon in some areas

Solar City accounts for one third of residential solar systems installed in the United States. Analysts credit the company's growth to its elimination of some upfront costs for consumers.

Those kinds of more affordable cost structures are fueling growth, according to Drew Cupps of Cupps Capital.

"There are challenges," he said, "but the exciting part from an investment standpoint is that the costs are now making it a viable alternative without subsidies."