Energize Weekly, September 20, 2017
Solar installations were at near-record levels in the second quarter of 2017, but the rooftop solar market was weak. The forecast is that residential solar will see its first down year ever.
The analysis comes from the quarterly market study by GTM Research, a Wood Mackenzie company, and the Solar Energy Industries Association, an industry trade group.
For the second quarter of 2017, 2,387 megawatts (MW) of photovoltaic solar (PV) were installed, an 8 percent increase compared with the same quarter in 2016. It marked the second largest quarter ever.
The strong quarter helped make solar the second largest source of new generating capacity, 22 percent, for the first half of 2017, behind natural gas-fired generation.
This growth was spurred primarily by utility-scale and non-residential solar, while residential solar posted just a 1 percent increase.
The main market driver will continue to be the utility-scale market where a total of 1,400 MW came online in the second quarter of 2017, accounting for 58 percent of all the capacity installed in the quarter.
Non-residential solar, primarily installations at commercial and industrial facilities, were up 31 percent. The demand by companies for onsite solar will continue to be a strong market, the report said.
Another contributor was community solar, large arrays in which residents and businesses can buy a share. Community solar is on track to add more than 400 MW, nearly doubling the community solar installations from 2016.
The slow growth in the residential sector was due to a relatively weak California market, the nation’s largest for rooftop solar, and a slowdown in Northeast markets, the report said.
For the year, the market report forecasts a 9 percent growth in non-residential solar. Residential solar is projected to fall year-over-year for the first time.
“There are several factors behind this downturn,” the analysis said. “First, segment-wide customer acquisition challenges are constraining growth in major state markets. Second, national residential solar companies have slowed operations and pursued more profitable sales channels at the expense of growth. Meanwhile, growth in emerging state markets has not made up for weakness across the top 10 state markets, seven of which fell year-over-year in Q2 2017.”
GTM Research is forecasting 12.4 gigawatts of new PV installations in 2017, down 17 percent from a record-breaking 2016. The projection is for a decline in the solar market in 2017 and 2018 before rebounding in 2019.
By 2019, the solar market will have reached a “tipping point” with half the states having annual solar markets of at least 100 MW as PV’s economic appeal increases, according to the analysis. It projects that more than 30 states will have reached grid parity for residential solar. The analysis defines grid parity as the installation offering savings in its very first year of operations. More than two-thirds of the projects will be driven by cost competitiveness with natural gas.
The forecast is for installed PV capacity to triple over the next five years with annual installations reaching 16 gigawatts by 2022.