Driven by feed-in tariffs (FITs) and the commoditization of photovoltaic (PV) modules, along with innovative leasing programs for residential solar installations, distributed solar PV systems are expected to see double- and, in some countries, triple-digit growth over the next five years.

Distributed solar power systems offer a number of advantages over large, centralized solar arrays: they reduce the need for new transmission capacity, they are scalable to meet the specific demand of the end user, they help reduce efficiency losses from transmission, and they are relatively quick to permit and install.

According to a recent report from Navigant Research, worldwide revenue from distributed solar power generation will reach $112 billion annually by 2018.

"It is a great time for consumers and end users to purchase or lease distributed solar PV systems, as prices continue to fall in the midst of fierce competition and continued consolidation," says Dexter Gauntlett, research analyst with Navigant Research.

"Paradoxically, the impending slowdown in government-funded initiatives will actually benefit the market, as governments retool their FITs to place greater emphasis on onsite generation, opening the door to new business models and creating opportunities for the entire distributed solar value chain."

At the same time, solar PV trade disputes are expanding around the world at different points in the value chain, creating uncertainty for many companies, particularly in the United States and Europe. China, already the leader in manufacturing, is anticipated to install more solar PV systems domestically in 2013 than any other country, according to the report.

Ultimately, solar PV price reductions are expected to continue, albeit at a more gradual rate compared to the past 3 years, which have witnessed dramatic price declines as a result to an oversupply of Chinese modules.

The report, "Distributed Solar Energy Generation", analyzes the global market for distributed solar PV systems less than 1 megawatt in capacity and provides an assessment of the most important market drivers, technology trends, and challenges faced by the growing distributed solar PV industry.

Forecasts for average installed prices and annual installations, segmented by region, extend through 2018.