U.S. solar grew sharply in 2010, still lags Europe

* U.S. solar market grew 67 pct in 2010

* U.S. had 5 pct of global PV share in 2010, down from 2009

* U.S. PV installations expected to double in 2011

LOS ANGELES, March 10 (Reuters) - The U.S. solar power sector grew 67 percent in 2010 but still lagged European markets by a wide margin in installing solar systems, the industry's trade group said on Thursday.

The U.S. market for solar energy reached $6 billion in 2010, up from $3.6 billion the previous year, according to the Solar Energy Industries Association.

But U.S. share of worldwide photovoltaic solar installations slipped to 5 percent last year from 6.5 percent in 2009 due to booming growth in Germany and Italy, where solar players enjoy generous government incentives.

Photovoltaic, or PV, solar systems transform sunlight into electricity.

Solar electric installations reached 956 megawatts in the United States last year, including 878 MW of PV systems. More than 17 gigawatts of PV were installed globally.

In 2011, SEIA expects U.S. PV installations to double from 2010, while the global market will experience slower growth due to subsidy cuts in Europe.

"Much of the global PV industry is turning its eye toward the U.S. with great expectations," the report said.

This year is likely to be "light" for concentrating solar power, or solar thermal, SEIA said. In 2010, 77.5 MW of CSP were installed, and that portion of the market is expected to grow quickly in the coming years with 41 projects totaling 9 GW currently under development.

The U.S. market has diversified geographically in recent years. California represented about 80 percent of the U.S. PV market from 2004 to 2005, but last year accounted for less than 30 percent of the market. Other than California, the states that each installed more than 50 MW of PV systems in 2010 were Arizona, Colorado, Nevada and New Jersey.

In manufacturing, the United States increased its production of solar components substantially in 2010. Production of solar modules rose 62 percent, while wafer production grew 97 percent and cell manufacturing rose 81 percent.

However, stiff competition from low-cost regions such as China forced three domestic PV facilities to close last year, including a BP Solar (BP.L) plant in Maryland, Intel-backed (INTC.O) SpectraWatt's New York facility, and Evergreen Solar's ESLR.O factory in Massachusetts.

"Additional plant closures will not come as a surprise," SEIA said, but added that new plants would be built this year by Wacker Chemie AG (WCHG.DE), Flextronics (FLEX.O) and Stion. (Reporting by Nichola Groom, editing by Matthew Lewis)