US solar market takes a hit as experts expect decline in demand

Latest joint GTM Research and SEIA report indicates short term challenges ahead for the US solar market.

  • Written/Contributed by
  • Adam Johnston, Renewable Energy Analyst

According to the 2nd Quarter (Q2) US Solar Market Insight Report from SEIA, and GTM Research, 2.3GW of new solar PV capacity was added in the second quarter this year. This represented an 8 percent year-over-year gain from Q2 2016 with 2.044GW installed.

Utilities added 1.4GW of the 2.044GW (58 percent). GTM said this was the seventh straight quarter where utilities put more than 1GW of new capacity. GTM forecasts 8.1 GW this year.

Utility solar power has increased 17 percent from last year.

Volunteer procurement, mostly popular within southeastern US states have been the key driver for new solar PV capacity, making up 59 percent of all new utility procurement during the first half of 2017.

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However, new utility installations will only grow by 6.5GW in 2018 as many utilities will reach their current acquisition goals this year.

Solar-Installer-Safety
(Photo courtesy of Stefano Paltera/U.S. Department of Energy Solar Decathlon)

Residential markets grew slightly by 563 MW.

However, weakness in the home solar markets, declining on year by year basis of 17 percent overshadowed gains seen by utility-scale solar.

Residential installers in the primary markets, including California, and Arizona, have favored profitability over market growth, causing the drop.

GTM has now forecasted a 3 percent decline in the residential sector in 2017.

If there were some critical aspects of this report to take away was limited short-term growth with a dash of market uncertainty.

Bloomberg New Energy forecasts 10.4GW of new US capacity 2017, a 23 percent drop from 14.26GW added in 2016.

Residential solar markets growth may start to mature.

GTM Research analyst Austin Perea said the US home solar market is not growing as rapidly, compared to past years. This is a sign that residential solar growth will not see the frenzied expansion we saw in previous years as its now maturing.

Residential providers will need to look at untapped markets for potential strength. New markets including in Texas, Florida, and Utah, may provide some potential.

However, Perea notes the growth in these places would not be strong enough to cancel out declines from well-established markets, including California.

Utilities are now reaching their current procurement targets as utility growth is expected to only reach 6.5 GW in 2018.

Mix potential import tariffs on solar panels imposed by the Trump administration would throw more cold water on further growth within the second largest global solar PV market, only behind China.

Projects are now being scrapped as some developers are hoarding on solar panels in preparation for possible tariffs, according to Bloomberg.

Outside of 2018, expect growth to return in 2019 and beyond.

Growth is supposed to triple within five years, as 16GW of new capacity is projected to be added yearly, GTM Research said.

Utilities are expected to install 9.0GW of new capacity in 2019 thanks to new markets and service procurement trends.

US Mid-West markets will play a fundamental role in utility-scale growth. They are looking to compliment abundant wind power, according to Reuters.

Possible import tariffs on solar panels, along with possible future cuts on renewable energy incentives by The Trump Administrations could derail these projections.

Nonetheless, if the US solar industry can ride these short term waves, sunnier and stronger days are ahead.

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