Double-digit Gigawatt Growth in New U.S. Solar PV for Third Year Running
*SEIA, Wood Mackenzie Power & Renewables
- March 13, 2019
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New solar photovoltaic (PV) energy installations totaled 10.6 GW in 2018 in the U.S., down 2 percent from 2017. That said, it was the third year in a row U.S. PV capacity grew in the double digits in terms of new gigawatts of emissions-free solar power capacity, and that despite the impacts of U.S. import duties, according to the Solar Energy Industries Association (SEIA)-Wood Mackenzie Power & Renewables' U.S. Solar Market Insight 2018 Year-in-Review.
New, utility-scale solar PV capacity reached its highest point ever in 2018, the report authors highlight. Overall, newly installed solar PV generation represented 29 percent of new electricity generation capacity in the U.S. in 2018. That was slightly less than in 2017 due to a surge in new natural gas capacity installation last year, according to the report.
“The solar industry experienced growing pains in 2018, in large part due to the unnecessary tariffs that were imposed on solar cells and modules, but this report still finds significant reason for optimism,” said SEIA’s president and CEO, Abigail Ross Hopper.
U.S. solar PV: A look ahead
Looking ahead, the market research partners say U.S. installed solar power capacity is on track to more than double in the next five years, "proving solar's resiliency and its economic strength," Ross Hopper added. "It's clear this next decade is going to be one of significant growth."
Wood Mackenzie raised its five-year forecast for U.S. utility PV by 2.3 GW from Q4 2018. A large volume of project announcements, inclusion of more solar PV in utilities' long-term resource plans, an increase in project development fueled by renewable power standards and growing corporate interest lead to Wood Mackenzie to raise its forecast.
Nearer term, SEIA and Wood Mackenzie Power & Renewables expect newly installed solar PV capacity to increase 14 percent in 2019 and continuing to rise to 15.8 GW in 2021.
U.S. residential, non-residential solar in 2018
Turning to solar PV market segments, new, non-residential solar power capacity dropped 8 percent year-to-year in 2018 nationwide, a decline the report's producers attribute to "policy transitions in major markets." Newly installed utility-scale solar PV installations dropped 7 percent, in the main driven lower by Section 201 import tariffs, according to the report.
Newly installed residential solar PV capacity rose modestly for a fifth consecutive quarter, in contrast. New residential solar PV growth reached its highest in two years in Q4 2018 as new solar PV systems were installed on nearly 315,000 U.S. households, the report authors highlight.
"After the residential solar free-fall of 2017, growth in 2018 was driven by a more diverse mixture of national and regional installers than in previous years,” said Austin Perea, senior solar analyst at Wood Mackenzie Power & Renewables. “With a pivot toward more efficient sales channels, both national and regional installers exceeded expectations in California and Nevada, which drove the lion’s share of residential growth in 2018.”
New solar PV capacity installed in Florida and Texas, two states with comparatively low solar penetration, surpassed that of some of the high-penetration solar states, boding well for growth prospects in coming years, the report authors pointed out. "These emerging solar markets are poised to become the engines of growth for residential solar in the U.S.," they stated.
SEIA and Wood Mackenzie Power & Renewables provided the following as highlights of developments in U.S. solar PV for 2018:
In Q4 2018, the U.S. solar market installed 4.2 GWdc of solar PV, a 139 percent increase from Q3 2018 and a 4 percent increase from Q4 2017. This brought the annual total to 10.6 GWdc, 2 percent lower than 2017.
For the sixth straight year, solar was one of the top two sources of new electricity generating capacity in the U.S.
Cumulative operating solar photovoltaic capacity now stands at 62.4 GWdc, about 75 times more than was installed at the end of 2008.
After a year in which residential solar experienced 15 percent contraction, 2018 marked a year of rebound as the market grew by 7 percent. Q4 was the largest quarter for the residential solar segment in two years, a sign that the residential market is stabilizing. In total, 314,600 new residential PV systems were installed in 2019.
Non-residential PV saw an annual decline of 8 percent, largely due to policy shifts in states like California and Massachusetts.
There were 6.2 GWdc of utility solar installed in 2018, accounting for 58 percent of total U.S. annual capacity additions.
After the uncertainty of the Section 201 tariffs passed, 13.2 GWdc of utility solar PPAs were signed in 2018, though mostly with expected commercial operations dates in years after the tariffs have stepped down. The contracted pipeline peaked in Q3 2018 at 25.3 GWdc, the highest in the history of U.S. solar.
Wood Mackenzie forecasts 14 percent growth in 2019 compared to 2018, with over 12 GW of installations expected.
Total installed U.S. PV capacity will more than double over the next five years, with annual installations reaching 15.8 GWdc in 2021 prior to the expiration of the residential federal Investment Tax Credit (ITC) and a drop in the commercial tax credit to 10 percent for projects not yet under construction.