Showing resiliency in spite of the new tariffs on imported modules, the U.S. solar market added 2.5 gigawatts of solar PV in the first quarter of the year, representing annual growth of 13 percent, according to the latest U.S. Solar Market Insight Report from GTM Research and the Solar Energy Industries Association (SEIA).
Solar PV accounted for 55% of all U.S. electricity capacity added during the quarter and added more than two gigawatts for the 10th straight quarter, the study said.
Overall, the report estimates that solar’s growth in 2018 will mirror 2017’s 10.6GW before growing more robustly in 2019 and then accelerating in the early 2020s.
FIGURE: New U.S. Electricity Generating Capacity Additions, 2010-Q1 2018
Source: GTM Research / SEIA U.S. Solar Market Insight, Q2 2018
“The solar industry had a strong showing in the first quarter,” said SEIA President and CEO Abigail Ross Hopper. “This data shows that solar has become a common-sense option for much of the U.S. and is too strong to be set back for long, even in light of the tariffs. States from California to Florida have stepped up with smart policies that will drive investment for years to come.”
According to the report, the solar industry installed 1.4 gigawatts of utility-scale PV in Q1, the 10th consecutive gigawatt-scale quarter for the U.S.’s largest solar market segment.
GTM Research said utility-scale solar projects thus far have been relatively insulated from tariffs but analysts expect the tariffs to have a bigger impact on the segment in 2019. However, they forecast growth for the market. The report increased the forecast for utility-scale solar to 6.6GW in 2018. That’s slightly higher than the 6.47GW predicted in March.
The non-residential solar segment posted its fourth-highest installation total ever, with 509 megawatts installed. This represents year-over-year growth of 23%. Community solar continues to be a strong driver of non-residential solar demand. Minnesota alone added more than 100MW of community solar in Q1. The report says the U.S. has now surpassed 1 cumulative gigawatt of community solar capacity.
New additions of residential PV remained flat quarter-over-quarter and year-over-year in Q1 2018, following a 15% contraction in 2017.
“This is a promising indicator that constraints to residential PV growth like segment-wide customer acquisition challenges and national installer pullback are abating,” GTM Senior Analyst Austin Perea said. “However, these problems are not entirely solved, as we’re seeing slowdowns in states with a relatively high penetration of PV installations.”
The report notes that three of the top five residential solar markets in 2017 — Maryland, New Jersey, and New York — are expected to contract in 2018 for a second consecutive year as a function of the persistent customer-acquisition challenges. “The decline in some major state markets will be offset by growth in emerging markets,” Perea said.
GTM Research and SEIA highlighted Florida as a standout state in this quarter's edition of the report. Florida added more solar than it did in all of 2016, the second most capacity after California and the first time ever that it was ranked among the top 5 for quarterly installations.
GTM Research anticipates the U.S. market in aggregate will be flat this year. The U.S. market can again expect to see growth exceeding 10 percent in the early 2020s, driven in part by California’s recently announced policy requiring solar on all new homes. The report forecasts that within five years, California’s new home solar market alone will be larger than the No. 2 state residential solar market, New Jersey, by 100 MW.
By 2023, more than 14 GW of solar will be installed annually.
Key findings on solar’s performance in Q1:
- The U.S. market installed 2.5 GWdc of solar PV, a 13% year-over-year increase and a 37% quarter-over-quarter decrease.
- 55% of all new electric generating capacity brought online in the U.S. came from solar – the second consecutive quarter in which solar accounted for the largest share of new capacity additions.
- The residential PV sector was essentially flat on both a year-over-year and quarter-over-quarter basis. After four consecutive quarters of year-over-year declines, residential PV shows some signs of improvement over 2017.
- Coming off its largest quarter ever, non-residential PV fell 34% quarter-over-quarter, despite posting 23% year-over-year growth. Regulatory demand pull-in from looming policy deadlines in California and the Northeast – in addition to the continued build-out of a robust community solar pipeline in Minnesota – are the leading growth factors.
- While voluntary procurement by utilities is the largest driver of utility-scale PV, corporate procurement/offsite commercial and industrial now accounts for 2.0 GWdc, or 10%, of projects in development.
- GTM Research forecasts growth in 2018 will be flat compared to the 2017 level, with another 10.8 GWdc of new PV installations expected.
- Total installed U.S. PV capacity is expected to more than double over the next five years. By 2023, more than 14 GWdc of PV capacity will be installed annually