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Market for domestic solar power improves

Partly driven by an oversupply of cheaper panels from China, the domestic solar market had its best year in 2012, with the growth in installations outpacing that of the global market, according to an annual report to be released Thursday.

The report, from the Solar Energy Industries Association, the industry’s main trade group, and GTM Research, a renewable energy consulting firm, found that the amount of new solar electric capacity increased last year by 76 percent from 2011, raising the United States’ market share of the world’s installations above 10 percent, up from roughly 5 to 7 percent in the last seven years.

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“It’s kind of a new world order,’’ said Shayle Kann, vice president for research at GTM.

The United States continues to grow as European markets, which used to drive global expansion, have pulled back from feed-in tariffs and stagnated, he said.

‘‘The US has always been interesting and from a global standpoint, it’s always been a source of a lot of innovation,’’ Kann said. ‘‘But now the US market is holding a much more important place in terms of global solar demand.’’

Part of what has been helping the market has been the low cost of solar panels, partly the result of the overdevelopment of manufacturing capacity in China. The resulting glut of cheap panels has contributed to the dire financial straits of huge producers like Suntech.

The average cost of a solar panel has declined by 60 percent since the beginning of 2011, according to the findings. Some analysts said that low prices would force consolidations among manufacturers, prompting a rise in the cost of panels and a potential slowdown in momentum for the US installation industry.

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But as other costs of solar systems also decline, marginal increases in the price of panels might not be as important, Kann said.

In the fourth quarter of 2012, for example, panels represented 13 percent of the cost for an average residential solar system, down from 32 percent in the fourth quarter of 2010, he said.

Kelcy Pegler Jr., cofounder of Roof Diagnostics Solar, an installation company based in New Jersey, said there was still room to keep driving down the overall cost of solar systems even if panel prices went up.

‘‘I don’t want to understate how important material pricing is — it sure is important — but I don’t think we’re anywhere near optimal efficiency with the administrative and processing of solar,’’ he said.

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