Is The Sun Setting On The Solar Boom?
The U.S. solar industry is expected to see its expansion significantly curtailed this year after installing record capacity in 2016, marking the first annual decline in installations for the industry.
A new report from GTM Research and the Solar Energy Industries Association (SEIA) raises some question marks for the trajectory of the solar industry. In the second quarter, the U.S. installed 2.38 gigawatts of new solar PV. A decent performance, but with two quarters in the books, the industry is only on track to install 12.4 GW of new capacity in 2017, a decline of 17 percent from last year.
The report from GTM Research and SEIA laid out a few reasons for concern. Residential PV only expanded by 1 percent quarter-on-quarter, the result of “weakness in the California market and a slowdown in Northeast markets, which are feeling the impact of pull-back from national providers.” Solar’s super-charged growth in recent years can in part be attributed to state policies that mandate renewable energy. Those policies are reaching their limits, meaning that going forward, a lot of new installations will need to be made on a voluntary basis.
But, beyond those wrinkles, there are many reasons why solar providers still feel good about their prospects. Solar provided 22 percent of all new electric capacity in the U.S. in the first half of 2017, second only to natural gas. Also, the decline in installations this year will be in the context of a record-setting year in 2016 in which solar accounted for 39 percent of all new capacity—more than natural gas.
The expected expiration of tax credits at the end of 2016—credits that were ultimately extended through the end of the decade—led to a massive volume of projects last year. As the industry refills the pipeline with new projects, 2017 was always going to be a bit slower than 2016.
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