The solar energy industry will grow faster than expected during the next few years as American utilities invest heavily in large-scale solar farms, analysts with Barclays Capital said Tuesday in a research note.
Barclays analyst Vishal Shah noted that demand for utility-scale solar projects could eventually make up half of the U.S. market. Major utilities could install about 5 gigawatts of solar photovoltaic projects during the next three years, the analyst said.
Solar power is still a tiny player on the American electrical grid, however.
The utility-scale projects currently in operation in the U.S. provide 444 megawatts of energy to the grid according to the Solar Energy Industries Association. That's enough to power 2.8 million homes, and it's only a fraction of the power generated by another alternative energy source, the Palo Verde Nuclear Generating Station near Phoenix.
That amount is expected to jump more than 12-fold in the next few years, however, with dozens of new solar plants under development in California, Arizona, Florida and Hawaii.
Shah said SunPower , First Solar , Suntech Power Holdings and Yingli Green Energy will be the primary players in utility-scale projects in coming years.
Because of the banking meltdown, the expansion depends heavily on the promise of billions of federal stimulus dollars that Congress earmarked for solar in the past year.
Power companies have had trouble raising money for major projects, and they still don't yet know how they can access federal grants and loan guarantees.
SEIA spokeswoman Monique Hanis said the Treasury Department and the Department of Energy are expected provide more information this summer.
"The sooner we can get some guidance, the sooner we can get moving on these projects," Hanis said.