According to GTM Research and SEIA’s U.S. Solar Market Insight Report, the United States solar market added 2,387 MWdc of new PV capacity in the second quarter of 2017. This is up 8 percent year-over-year. Utility PV accounted for 58% of Q2 2017 installations, which marks the seventh consecutive quarter that the utility-scale space added more than 1 GWdc.
Although all three segments of U.S. solar experienced quarter-over-quarter growth in Q2 2017, non-residential PV is the only segment expected to actually grow on annual basis this year.
Non-residential PV is expected to grow 9%, following a record-shattering 58% growth in 2016 after three consecutive years of flat demand before 2016. The continued growth in 2017 is partly due to community solar, which remains on track to add more than 400 MWdc, nearly doubling community solar installations from 2016.
Meanwhile, residential PV is still expected to fall year-over-year for the first time ever, after falling year-over-year for the first time on a quarterly basis in Q1 and Q2 2017. There are several factors behind this downturn. 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.
Finally, utility solar’s downturn in 2017 has been softened by projects that pushed out their completion dates from 2016 as a result of the 30% federal Investment Tax Credit extension. These projects that have spilled over into 2017 represent more than 50% of this year’s utility PV forecast. Looking ahead, the recovery for utility solar is primarily driven by procurement outside Renewable Portfolio Standards, with more than 75% of the current pipeline coming from voluntary procurement, PURPA, off-site corporate procurement, and California-based community choice aggregators.
Altogether, U.S. solar is expected to fall year-over-year in 2017 and 2018 before rebounding in 2019, in large part due to trends in utility PV procurement. Throughout H1 2017, the majority of utility solicitations have focused on projects that can come on-line with a 30% federal ITC in 2019 or later by leveraging commence-construction rules.
The return to growth in 2019 will also come from a growing number of state markets achieving scale. By 2019, more than half of all states in the U.S. will be at least 100 MW annual state markets.
That demand diversification is a function of distributed and utility solar having reached tipping points in terms of economic attractiveness. For example, more than 30 states will have surpassed grid parity for residential PV. Meanwhile, over two-thirds of the utility PV pipeline comes from projects procured outside renewable portfolio standards, driven by the costcompetitiveness with natural gas alternatives.
Market Segment Trends
563 MWdc installed in Q2 2017
Up 1% from Q1 2017
Down 17% from Q2 2016
437 MWdc installed in Q2 2017
Up 10% from Q1 2017
Up 31% from Q2 2016
1,387 MWdc installed in Q2 2017
7th consecutive quarter in which utility PV added over 1 GWdc
Contracted utility PV pipeline currently totals 23.0 GWdc
Source: GTM Research