BOSTON and WASHINGTON — The U.S. solar market is forecast to grow substantially this year — 119 percent — according to GTM Research in its U.S. Solar Market Insight Report 2015 Year in Review, published in conjunction with the Solar Energy Industries Association (SEIA).
Led by the utility-scale segment, GTM Research is predicting 16 gigawatts (GW) of solar will be installed in the U.S. in 2016, more than doubling the record-breaking 7.3 GW installed in 2015.
While utility-scale installations will represent 74 percent of the installations for the year, the residential and commercial markets are also expected to experience strong growth in 2016. In fact, the U.S. is on the verge of the 1 millionth solar installation milestone.
“This is a new energy paradigm and the solar industry officially has a seat at the table with the largest energy producers,” said Rhone Resch, SEIA president and CEO. “Because of the strong demand for solar energy nationwide, and smart public policies like the ITC [investment tax credit] and NEM [net energy metering], hundreds of thousands of well-paying solar jobs will be added in the next few years benefiting both America’s economy and the environment.”
With the federal investment tax credit (ITC) initially set to expire at the end of this year, the pipeline was filled with projects that would come on-line in 2016. In December, however, an extension of the ITC provided long-term market certainty. Now, in 2016, state-level drivers and risks will move to the forefront and play even larger roles in the growth of both distributed and utility-scale solar.
According to the report, the rollout of new community solar programs, new utility-led efforts to enable corporate procurement of offsite solar, and ongoing debate over the value of rooftop solar are three key trends that will drive U.S. solar demand throughout the year.
“In 2016, the rooftop solar economic outlook will depend not only on favorable outcomes to net energy metering debates, but customer-wide and solar-specific rate structure reforms that can impact savings due to solar as well,” said Cory Honeyman, GTM Research senior analyst.
On the nonresidential side, PV demand will be supported by a triple-digit megawatt (MW) pipeline of community solar projects. Colorado, Massachusetts, and Minnesota are expected to collectively install more than 100 MW of community solar this year.
Looking ahead to 2017, the residential and nonresidential solar PV markets are both expected to grow year-over-year, but the report cautions that U.S. solar is still expected to drop on an annual basis due to the pull-in of utility PV demand in 2016.
“As the double-digit gigawatt utility PV pipeline is built out in 2016, utility solar is expected to experience a reset in 2017,” said Honeyman, noting that the market will shrink to a still-impressive 10 GW. “But between 2018 and 2020, the extension of the ITC will reboot market growth for utility PV and support continued growth in distributed solar as a growing number of states reach grid parity.”
The federal ITC provides a 30 percent tax incentive on all solar projects. In December 2015, Congress extended the credit out to 2019 with a stepdown through 2022 and project completion deadline of 2023 for some projects.
By 2021, GTM Research expects the U.S. solar market to surpass 100 cumulative GW, with an annual install rate of 20 GW or more.
For more information, visit www.seia.org/research-resources/us-solar-market-insight.
Publication date: 3/22/2016