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The Simple Math Behind Solar Power’s Expansion

Althea Chang
Big Data Download

As electricity prices rise for homeowners and businesses alike, alternative energy is getting more popular—and solar power in particular is seeing a lot of growth.

Solar installations were up 76 percent last year compared with 2011, with 3.3 gigawatts installed across the country, according to the Solar Energy Industry Association. About 1.2 American households currently use solar energy, according to an annual report released by the trade group.

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Since 2001 through last year, the average retail price of electricity in the United States has gone up 35 percent, while the average cost of having a photovoltaic system installed has fallen by nearly 70 percent, the association reported.

That level of growth could bode well for companies like First Solar (FSLR), YingLi (YGE) and SunTech (STP), which manufacture solar cells. First Solar in particular announced bullish expectations for the next several years, exceeding what analysts had been expecting. First Solar also said it plans to buy TetraSun—a startup that manufactures rooftop solar panels—briefly sending its stock higher mid-week.

"Solar has gone through a tremendous transformation in the past few years," Solar Energy Industry Association Chairman Arno Harris told "Big Data Download."

But the industry still faces challenges as the cost of using other forms of alternative energy falls as well, Harris said.

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Consumers appear to be interested in any type of energy that can save them money—some more than solar, it would seem. According to Yahoo! search data, consumers looking for energy tax credits are searching most for Energy Star credits, flex fuel credits, hybrid car tax credits and alternative fuel tax credits in the 30 days ending April 7. Solar tax credits were not among the top 10 energy-related tax credit search terms.

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