Demand for rooftop solar-panel generation in California, one of the world's top solar markets, has remained strong despite the recession, helped by state subsidies and falling panel prices, state regulators said in a quarterly report.

California homeowners and businesses filed a record number of applications in August to receive state subsidies for installing rooftop solar panels, the California Public Utilities Commission said in a quarterly report released this month. The state received more than 2,000 such applications in August, up 44% from June, which held the previous record for applications, the CPUC said. Meanwhile, solar panel prices, as reported to the state, fell 9% for small installations and 13% for larger ones, the CPUC said.

While residential customers accounted for the vast majority of state solar-subsidy applications, the state received a steady stream of commercial applications, averaging about 85 a month from July through September, the CPUC said. Residential applications fell to less than 1,400 in September, the CPUC said.

Solar-panel systems less than 10 kilowatts in size averaged about $9.02 a watt installed, down 9% from a year earlier, the CPUC said. Solar systems larger than 10 kilowatts averaged $8.05 a watt installed, down 13% from a year ago, according to the CPUC.

The CPUC has noted that there is a time lag in the prices included in its data from applications. In particular, prices quoted in solar-subsidy applications could be several months old and not reflect current prices, which could be lower, as panel prices--both wholesale and retail--have continued to fall over the past year.

Customers of the state's three large utilities have signed up for nearly 400 megawatts of solar subsidies since the state solar program begin in 2007, with customers of PG&E Corp.'s (PCG) northern California utility accounting for 57% of demand, customers of Edison International's (EIX) southern California utility taking 32%, and customers of Sempra Energy's (SRE) San Diego utility accounting for 10%.

The data should come as welcome news to the solar industry, which has struggled against an oversupply of panels amid weak demand as the global recession and tight credit markets have held back sales.

California's Solar Initiative is a 10-year, $3.4 billion effort aimed at boosting statewide installation of rooftop solar generation, while pushing down the cost of installation.

-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com