Since 2006, the amount of installed solar power in the U.S. has grown nearly fourfold to about 425 megawatts of large-scale generation that feeds the power grid, according to the Solar Energy Industries Association, a lobbying group. The number of solar companies climbed to about 5,000 in 2009, up from 3,400 a year earlier. The U.S., however, still lags other countries such as Germany and Spain, where governments have long provided big incentives.

Companies usually look to Asia to cut costs but some are also establishing U.S. manufacturing as well as the market for solar power matures here. BP PLC (BP) partially closed a Maryland manufacturing plant and shifted to Chinese suppliers, while Yingli Green Energy Holding Co. (YGE), a Chinese solar panel manufacturer, is planning to establish a manufacturing operation in the U.S to better serve its customers.

Solar Power Inc. sees its revenue reaching $150 million this year, up from $65 million in 2009. It also plans to double the size of its 63-person U.S. work force.

Federal tax credits and the economic stimulus package are key drivers of that expected growth. Earlier this month, Sacramento County in California made an initial commitment of $24.7 million in bonds to Solar Power. Funds from those Recovery Zone Facility Bonds--a tax-exempt bond created by the federal stimulus plan and intended to encourage job creation and investment in capital projects--will help pay for the U.S. facility.

In addition, a tax credit initially established in 2005 and extended for another eight years in 2008 allows residential and commercial users to recoup 30% of the cost of installing a solar system. The extension, which was part of the Economic Stabilization Act of 2008, eliminated the previous $2,000 cap on the investment tax credit for residential solar installations and also made public utilities eligible for the tax credit.

That tax credit has been "huge," providing a long-term incentive that will help manufacturers drive down costs over time, improve technology and achieve economies of scale, Tisdale said.


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