U.S. solar installations will reach 16 GW in 2016. By 2019 U.S. solar is expected to resume year-over-year growth across all market segments. And by 2021, more than half of all states in the U.S. will be 100+ MW annual solar markets, bringing cumulative U.S. solar installations above the 100 GW mark. Among them, California stays number one in total solar PV installations: 700 MW in Q1, followed by North Carolina, Massachusetts and Nevada. The research predicts continuous growth in all segments but most of all in the area of utility-scale PV projects. While utility-scale installations will represent 74 percent of the installations for the year, the residential and commercial markets will also experience strong growth in 2016.
Utility PV: Given that the federal ITC extension was ultimately passed by Congress in December 2015, more than 10 GW of utility PV has been rushed through the development cycle and is still slated to come on-line this year. At least another 4.5 GW of utility PV installations are expected to be nearly or fully finished with construction in Q4 2016, with official commercial operation expected in 2017. The completion of projects such as 579 MW BHE Renewables Solar Star project, the largest operation solar project in the world, and the 550 MW Desert Sunlight Solar Farm, operated by First Solar, contributed to the utility sector’s strong growth in 2015. With nearly 20 GW in development, utility-scale PV installations will be the force behind the U.S. market growth in 2016 and account for nearly three-fourths of new installations.
Non-residential PV: For the non-residential PV market, which has remained flat over the past three years, a rebound in 2016 should stem from new state-level policies established during legislative or regulatory proceedings in early 2016. These include extensions to NEM program capacity limits and the rollout of new non-residential PV incentive programs, particularly for community solar. In total, 20 states experienced growth on a year-over-year basis, out of which Massachusetts and Maryland saw notable growth this year, as recent regulatory developments have provided some short-to medium-term policy stability for commercial development.
Residential PV: The timing of net metering reforms in a handful of major state markets will play a role in inflating 2016 growth. With an average growth of 11% over the preceding four quarters, the residential PV slowdown in first quarter 2016 was a function of both seasonal factors and the inevitable leveling-off of demand after years of persistently robust growth. Though California still accounts for nearly 50% of residential PV this quarter, installations did not grow in Q1 for the first time in a year, with many major state markets experiencing similar trends.
2016 finds the U.S. solar market in a period of transition, characterized by shifts in both the drivers and geographic distribution of market demand. A wave of geographic demand diffusion is expected, primarily in the utility PV market. Most notably in the southeast, state where operating solar capacity stands at or below 10 MW will increase their capacity by more than tenfold due to inexpensive utility PV power-purchase agreements that reflect the ability of utility-scale solar to both compete with and complement new natural gas plants.
Meanwhile, commercial customers’ solar procurement strategies are expanding, with well over 1 GW of offsite solar projects in development, from both community solar and offsite utility-scale solar. And finally, the policy landscape for rooftop solar is becoming increasingly fragmented and complicated with debates over net metering and rate design evolving beyond fixed-charge proposals to multifaceted ones that encompass demand charges, time-of-use rates, and/or value-of-solar tariffs.
Amidst these near-term state-level rivers and risks, the extension of the federal Investment Tax Credit will serve as a long-term policy bridge to help transform solar PV into an increasingly mainstream source of power generation in the U.S. electricity market. With the federal ITC extended through 2021 and a “commence-construction” rule added, market participants benefit from federal-level policy visibility through 2023.
Source: GTM Research/SEIA U.S. Solar Market Insight report