A report from the market analysis firm GTM Research and the Solar Energy Industries Association (SEIA) reveals that, in the 2016 first quarter, the U.S. solar industry installed some 1,665 megawatts of DC electricity-generating capacity (MWDC), a 24 percent year-to-year gain. The Q1 performance pushed the number of operating solar photovoltaic (PV) installations above the one million mark.
In a particularly striking finding, the GTM/SEIA report, “U.S. Solar Market Insight,” reveals that solar projects represented by far the largest share of new electricity-generating capacity brought on line during the quarter—a whopping 64 percent of total new capacity, versus 33 percent for wind projects and less than 5 percent for natural gas, coal, and other projects.
Share of new U.S. electric generating capacity additions, 2010-Q1 2016 (solar data from GTM Research; other technologies from U.S. Federal Energy Regulatory Commission). [Image: GTM Research/SEIA, “U.S. Solar Market Insight, Q2 2016”]
In a press release accompanying the report, SEIA’s interim president, Tom Kimbis, characterized the solar industry as “growing at warp speed.” Given current trends, he suggested, the number of installed solar projects could balloon to two million within the next two years. Over all, for 2016 as a whole, the report projects that the solar industry will install an unprecedented 14.5 GWDC of new capacity, 94 percent above the 2015 figure of 7.5 GWDC.
Utilities driving the train
Solar PV additions by utilities constituted the key growth driver during the quarter, accounting for 43 percent of the added solar capacity. Fueling some of those capacity gains was the anticipated possible end of the federal investment tax credit (ITC) for solar projects. The ITC ended up being extended for five years at the end of 2015, but in the meantime projects had been rushed into production to take advantage of the credit before its possible sunset.
Some of those late-state projects are still in the pipeline and set to come on line during 2016 and 2017, according to the GTM/SEIA report. Those projects put the utility sector on track to install more than 10 GWDC of solar generating capacity for 2016 as a whole, nearly 70 percent of the total solar capacity addition projected for the year.
Residential and nonresidential PV additions, while more muted than on the utility side, were still impressive, with year-to-year gains in the area of 34 to 36 percent for the quarter. Regional trends played a big role. The state of California continues to dominate in overall solar installations, but year-to-year capacity gains there were comparatively slow in Q1 2016; on the other hand, other states, including New York, Massachusetts, and Maryland saw impressive growth, owing to booming rooftop PV markets in the residential sector and regulatory inducements on the commercial-PV side.
Continued growth in electricity-generating share
Notwithstanding the rapid expansion of recent years, and the projected growth this year, solar PV is still expected to account for only 2.8 percent of total U.S. electricity-generating capacity by the end of 2016, according to the report. But GTM and SEIA anticipate that the solar share could rise to 6.1 percent by 2021, pushing U.S. cumulative solar operating capacity above the 100-GW mark.
Those gains, according to the report, will be driven largely by the multiyear extension of the ITC, which the report calls “the most important policy development for U.S. solar in almost a decade.” Under the terms of last year’s extension, the federal credit will remain at 30 percent through 2019, and then will ratchet down to 26 percent in 2020, 22 percent in 2021, and 10 percent in 2022. GTM/SEIA estimate that more than 20 GWDC of the PV capacity expected to be added between now and the end of the decade will be attributable to the ITC impact alone.
More information on the GTM/SEIA report can be found at www.seia.org/cs/research/solarinsight.