Solar market cools in the third quarter of 2017, solar import uncertainties loom
Energize Weekly, December 20, 2017
The U.S. solar market cooled in the third quarter of 2017 with a projected 22 percent decline in installations for the year when compared with record-setting 2016, according to a report by GTM Research and the Solar Energy Industries Association (SEIA).
While the 2 gigawatts (GW) of solar photovoltaics (PV) installed in the third quarter of 2017 marked a 51 percent decline over the third quarter of 2016, it was still the eighth consecutive quarter of 1 GW or more of installations.
Through the first three quarters of 2017, solar still ranked second behind natural gas for all new generating capacity brought online in the U.S.
There are a number of factors roiling the market, according to the quarterly Solar Energy Insight Report by GTM Research, a cleantech consulting firm, and SEIA, an industry trade group.
A global shortage of solar modules and the petition by two U.S. solar panel makers to place tariffs on imports led to price increases across all market segments for the first time in more than three years.
Rooftop solar installations fell 10 percent quarter-over-quarter due to weakening of the California and Northeast markets, which continued to feel the impact of a pullback by national solar installers.
GTM Research said it doesn’t anticipate a rebound in 2018. “U.S. solar is expected to fall year-over-year again in 2018 before rebounding in 2019, in large part due to trends in utility PV procurement,” according to the analysis. “During the first half of this year, most utility solicitations have focused on projects that can come online with a 30 percent federal ITC [investment tax credit] in 2019 or later by leveraging commence-construction rules.”
The ITC is set to end in 2021, but was going to be stopped immediately in the initial tax reform bill proposed by Congress. The final version of the tax bill retains about 80 percent of the tax credit.
There was growth in the non-residential sector, which was up 22 percent year-over-year, driven by regulatory requirements in California and the Northeast, as well as a strong community solar program in Minnesota. Community solar builds land-based arrays that are shared by homes and businesses.
Utility-scale projects accounted for 51 percent of the U.S. installed capacity for the third quarter—a total of 1 GW. About 4 GW are under construction, and GTM is forecasting an additional 3.8 GW coming online in the fourth quarter, making it the second-biggest quarter for installations after the fourth quarter of 2016.
The rooftop, or distributed solar market, is expected to resume growth of 10 percent to 20 percent between 2018 and 2022 as the market becomes less reliant on a few national installers and customer acquisition costs are reduced.
In September, the International Trade Commission ruled in favor of the two solar panel makers—Suniva Inc. and SolarWorld—that had brought the case against imported modules and recommended a variety of actions to President Donald Trump.
Trump, who has the ultimate power to impose tariffs or quotas, has until Jan. 26 to make a decision on the petition.
“Fearing the potential negative ruling from the Trump Administration’s final decision on Suniva’s Section 201 case, some EPCs [engineering, procurement and construction firms] and installers have begun procuring modules for projects in 2018 and beyond,” according to the Insight report.
“If the president chooses to implement a trade-restrictive remedy, we would expect downward revisions in our forecast across all three market segments,” the report said.