The proverbial “tipping point” for residential solar may be a ways off, but it appears to be coming into sharper focus.

A recent report issued by GTM Research for the Solar Energy Industries Association (SEIA) showed an 85% increase in photovoltaic (PV) deployments in the first quarter of 2012 compared with the same quarter last year.

The additional 506 megawatts (MW) of capacity added in the first three months of the year brings the U.S. total to an estimated 4,940 MW, enough to power 775,000 homes for a year.

Growth is expected to continue. “Our estimates for 2012 have been adjusted up to 3,200 MW of new capacity (an 18% boost) based on these first quarter results,” says SEIA’s Tom Kimbus. “We are achieving a scale that is significantly contributing to the country’s energy generation, strategy, and independence.”

In the five years between now and 2016, SEIA expects 25,000 MW of new installed capacity across the residential, commercial, and utility sectors—a pace that would likely triple current capacity within three years and establish solar as a “competitive energy option,” he says.

Kimbus and his GTM Research counterpart Shayle Kann point to a 47% drop in the average cost of a solar panel since first quarter 2011, thanks in part to a global overcapacity of solar cells, an increasing number of coal-fired electricity plans going offline, creative financing, and federal tax credits available through 2016.

Kimbus also notes an increase in utility-enabled net metering and a loosening of design allowances for rooftop arrays as growth drivers. “The strong markets for solar share proactive steps to remove barriers,” he says.

Solar-friendly policies and high electricity rates, more so than available sunlight or the number of hours of sunlight per day, are what sparks a market’s potential and growth, says Kann. That’s why New Jersey is now the country’s No. 1 solar state (supplanting California) and why Massachusetts, New York, and Ohio continue to add capacity at a faster clip than Florida, Nevada, and Texas. “Florida has no statewide renewable energy plan,” he says.

The residential sector accounted for 94 MW of the new capacity reported, setting a new record for the second straight quarter. Of approximately 18,000 new installations across the residential, commercial, and utility sectors, nearly 90% (about 16,000) were in housing. Commercial installations led the three sectors with 289 MW of new capacity last quarter.

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