The U.S. solar market hit a major milestone in the second quarter of this year, with more than half a million homes and businesses now generating solar energy. According to the Q2 2014 U.S. Solar Market Insight Report from GTM Research and the Solar Energy Industries Association (SEIA), the U.S. installed 1133 MW of solar PV in the second quarter of this year.
Where was all that solar installed?
The residential and commercial segments accounted for nearly half of all solar PV installations in the quarter. The residential market has seen the most consistent growth of any segment for years, even beating commercial for the first time in Q1. That momentum shows no signs of slowing down. For the first time ever, more than 100 MW of residential PV came online without any state incentive in Q2 2014.
Across the United States, cumulative PV and concentrating solar power (CSP) operating capacity has eclipsed 15.9 GW, enough to power more than 3.2 million homes.
“Solar continues to soar, providing more and more homes, businesses, schools and government entities across the United States with clean, reliable and affordable electricity,” said SEIA President and CEO Rhone Resch in a statement. “Today, the solar industry employs 143,000 Americans and pumps nearly $15 billion a year into our economy. This remarkable growth is due, in large part, to smart and effective public policies, such as the solar Investment Tax Credit (ITC), net energy metering (NEM) and renewable portfolio standards (RPS). By any measurement, these policies are paying huge dividends for both the U.S. economy and our environment – and should be maintained, if not expanded, given their tremendous success, as well as their importance to America’s future.”
Showing continued strength, the utility PV segment made up 55% of U.S. solar installations in the second quarter of the year. It has accounted for more than half of national PV installations for the fifth straight quarter. In just two years, the utility segment has quadrupled its cumulative size, growing from 1784 MW in the first half of 2012 to 7308 MW today.
“Solar continues to be a primary source of new electric generation capacity in the U.S.” said Shayle Kann, Senior Vice President at GTM Research. “With new sources of capital being unlocked, design and engineering innovations reducing system prices, and sales channels rapidly diversifying, the solar market is quickly gaining steam to drive significant growth for the next few years.”
Is solar mainstream yet?
The report poses that question and answers, “Over the past two years, solar PV has moved light years ahead of where it stood back in the first half of 2012. Between 1H 2012 and 1H 2014, cumulative residential and non-residential installations have both doubled, while cumulative utility PV installations have more than quadrupled. But this top-level installation growth is not the only evidence of solar becoming increasingly mainstream within the broader energy landscape.”
Other signs: Much more solar is now deemed bankable, utilities are getting into the residential solar market, and even utilities without RPS requirements are procuring utility-scale solar because of its cost-effectiveness.
What about the future?
GTM Research and SEIA forecast that 6.5 GW of PV will be installed in the U.S. by the end of this year, up 36% over 2013.
Specifically, the report predicts that U.S. PV installations will reach 6.5 GWdc for 2014, a 36% increase over 2013. The fastest growth is expected in the residential segment, at 55% year-over-year. Following that will be the utility segment at 37% and the non-residential segment at 21%. The next two years should also see continued growth.
GTM and SEIA note they have increased their utility forecast for 2014 because of greater pipeline visibility. The non-residential outlook was lowered in part because of a downturn in Arizona and weak growth in New Jersey.
Looking beyond the next few years, a new report from Navigant Research, “Global Distributed Generation Deployment Forecast,” forecasts that worldwide revenue from distributed generation (DG) will grow from $97 billion in 2014 to more than $182 billion by 2023. That includes solar PV as well as other technologies.
In recent years, Navigant notes, public and private investment in distributed generation (DG) technologies has grown significantly as new business models, such as the solar lease and solar power purchase agreement, have been deployed.
“One of the most important issues for the energy industry is striking a balance between DG growth and fairly compensating utilities for the ability to effectively use the existing electrical grid as a backup service for onsite power at higher concentrations in the future,” says Dexter Gauntlett, senior research analyst with Navigant Research. “Utilities that pro-actively engage with their customers to accommodate DG – and even participate in the market themselves – limit their risk and stand to benefit the most.”
To date, DG has been more disruptive in Western Europe than in any other region, according to the report. Utilities are losing hundreds of billions of dollars in market capitalization as DG reaches higher levels of penetration in leading countries such as Germany, the United Kingdom, and Italy. The prospect of similar losses by utilities in the U.S. is prompting a struggle among utilities, the DG industry, and regulators over the future of DG models.
The GTM/SEIA report also points out challenges to the U.S. solar market, but concludes that “the first half of 2014 showcased innovative financing strategies, evolving utility business models, and solar’s increasing economic competitiveness with fossil fuels, all of which offer encouraging signs of the U.S. market’s ability to weather barriers to growth and further push solar PV into the mainstream.”
Key findings from the GTM/SEIA report
- The U.S. installed 1133 MW of solar PV in Q2 2014, up 21% over Q2 2013 — making it the fourth-largest quarter for solar installations in the history of the market.
- Cumulative operating PV capacity has now eclipsed the 15 GW mark, thanks to three consecutive quarters of more than 1 GW installed.
- As of the first half of 2014, more than half a million homeowners and commercial customers have installed solar PV.
- For the first time ever, more than 100 MW of residential PV came online without any state incentive.
- In the first half of 2014, 53% of new electric generating capacity in the U.S. came from solar.
- Growth remains driven primarily by the utility solar PV market, which installed 625 MW in Q2 2014, up from 543 MW in Q2 2013.
- PV installations are forecast to reach 6.5 GW in 2014, up 36% over 2013 and more than three times the market size just three years ago.
- Q1 2014 was the largest quarter ever for concentrating solar power, due to the completion of the 392 MWac Ivanpah project and Genesis Solar project’s second 125 MWac phase. While Q2 2014 was dormant for CSP, a total of 857 MWac is expected to be completed by year’s end, making 2014 the largest year ever for CSP.