The U.S. solar market is set to grow a staggering 119% this year, says GTM Research in its latest U.S. Solar Market Insight Report 2015 Year in Review, published in conjunction with the Solar Energy Industries Association (SEIA).
GTM Research forecasts that 16 GW of solar, led by the utility-scale segment, will be installed in the U.S. in 2016, more than doubling the record-breaking 7.3 GW installed in 2015.
Though utility-scale installations are expected to represent 74% of total installations for the year, the residential and commercial markets will also experience strong growth. According to the market insight report, the U.S. is nearing its 1 millionth solar installation.
“This is a new energy paradigm, and the solar industry officially has a seat at the table with the largest energy producers,” says Rhone Resch, president and CEO at SEIA. “Because of the strong demand for solar energy nationwide, and smart public policies like the ITC and NEM, 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, both developers and engineering, procurement and construction contractors filled their pipelines with projects that would come online this year. 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 three key trends that will drive U.S. solar demand throughout the year include the rollout of new community solar programs, new utility-led efforts to enable corporate procurement of off-site solar and the ongoing debate over the value of rooftop solar.
“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,” says Cory Honeyman, research senior analyst for GTM.
On the non-residential side, PV demand will be supported by a pipeline of community solar projects with triple digits. Colorado, Massachusetts and Minnesota will collectively install more than 100 MW of community solar this year.
Looking ahead to next year, the residential and non-residential 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,” says 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% tax incentive on all solar projects. In December 2015, Congress extended the credit out to 2019 with a stepdown through 2022 and a project completion deadline of 2023 for some projects.
By 2021, GTM Research expects the U.S. solar market to surpass a cumulative 100 GW, with an annual install rate of 20 GW or more.