While Californians are enjoying lower-priced solar systems, the wind-down of California Solar Initiative incentives for home and small business owners and expiration of a federal cash grant program may shift a lot of the market action from small rooftop systems to larger installations in response to utility programs. The average cost of installed photovoltaic systems fell 17 percent in 2010. It dropped by another 11 percent in the first six months of this year. \u201cThere\u2019s an oversupply or glut in manufacturing capacity,\u201d said Galen Barbose, author of a Lawrence Berkeley National Laboratory report released last month detailing the lower cost of solar. Growing global demand for solar systems in recent years spurred what Barbose called a large expansion of manufacturing capacity. \u201cMuch of it in Asia,\u201d he added. Expansion in manufacturing got out ahead of growth in demand, he said, which became a contributing factor in falling prices, along with advancements in solar technology that also have lowered the price of panels. Home and business owners saw the price of solar installation work drop too, not just the price for the panels. Installation work dropped 18 percent between 2009 and 2010, according to the report. Economies of scale achieved due to state incentive programs may be behind the easing price of installation work. The lower prices have resulted in a recent spate of setbacks for manufacturers, like the much publicized bankruptcy of Fremont-based Solyndra. But Barbose thinks that oversupply and dwindling incentives mark just a temporary bump in the road for manufacturers. California solar incentive payments continue to drop and a federal 30 percent cash grant in lieu of a federal tax credit expires at the end of this calendar year. This will create what Barbose called \u201cpressure\u201d for manufacturers, but it doesn\u2019t signal a \u201cgame changing trend.\u201d He said the industry is merely reverting back to the traditional 30 percent federal investment tax credit environment preceding state incentives and cash grants. Utilities like Southern California Edison are taking solar bankruptcies in stride too. The company had contracts with a Solyndra subsidiary under its 500 MW utility solar program to install 16 MW of capacity. Edison, explained spokesperson Vanessa McGrady, is used to \u201ca lot of fall out\u201d between the time it contracts for renewable energy projects and the time they\u2019re due to be completed. Solyndra\u2019s subsidiary, for instance, never even got started on any of the projects Edison contracted for in 2010, she said. It won\u2019t affect the utility too much because it typically \u201cover-procures\u201d for renewable energy and doesn\u2019t pay for projects \u201cuntil the electrons are delivered,\u201d said McGrady. Looking ahead, utility programs represent a significant market for the solar industry. Edison, for instance, has about 35 MW of installed capacity under its distributed solar generation program. It has another 51 MW under development, according to spokesperson Gil Alexander. That leaves the balance of the 500 MW program open to future competition. Pacific Gas & Electric has one 2 MW installation in operation under its 500 MW distributed solar program, according to California Public Utilities Commission data, and about another 50 MW under contract for development. The California Solar Initiative--with a 3,000 MW goal--has 1,000 MW of installed rooftops and incentive applications for about another 350 MW pending.