US: Solar accounts for 51% of all new Q1 energy additions

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According to the Solar Energy Industries Association (SEIA) and GTM Research, a record 1.3 GW of PV was installed across 66,440 systems in the U.S. in Q1 2015 (compared to 5 GW in China, according to SolarPower Europe). This is the sixth consecutive quarter more than 1 GW has been added. California saw the most capacity installed, at 718 MW, followed by Nevada at 97 MW and New York at 59 MW.

A highlight for the U.S. industry, solar energy accounted for 51% of all new energy generation in Q1. Moreover, both the residential and utility sectors added more new capacity than natural gas.

In their Q1 U.S. Solar Market Insight Report, SEIA and GTM Research calculate that 2015 will see 7.9 GW installed across the country, a 27% increase on 2014. The residential sector is expected to see the most rapid growth, while the utility-scale sector, despite its booming pipelines ahead of the December 31, 2016 Federal ITC deadline, is expected to be the most sluggish.

All hail residential

Marking a 76% increase on the previous year, and rising 11% from Q4 2014, the residential sector saw 437 MW deployed in the first quarter. "Through Q1 2015, nearly one-fourth of cumulative residential solar installations have now come on-line without any state incentive," say the report’s authors. This compares to just 2% in 2012. Net metering, the ITC and accelerated depreciation have boosted growth.

On the back of these strong figures, GTM Research’s senior vice president, Shayle Kann, believes the residential sector will become the "primary driver of not only solar market growth, but the overall electricity generation mix." Overall, three million residential systems are expected to be deployed in the next five years.

Representing a 10% decrease on the previous year, the reports states that average costs for residential solar systems are now at $3.48/watt. As usual, California is leading the way, however, Arizona is also experiencing "meaningful residential installation growth." Although still "minor", the share of unsupported installations in New York and Nevada is said to be growing.

Large-scale

In addition to the 437 MW installed across residential systems, the non-residential sector saw 225 MW of new solar capacity added – a decrease of 24% Q/Q and 3% Y/Y.

Despite the decrease, SEIA and GTM Research say they remain "cautiously optimistic" about the sectors’ future health, predicting a 21% increase for the whole year. "Non-residential solar’s incremental rebound in 2015 is expected to come from three factors: California utilities expanding their solar-friendly tariffs for commercial solar, community solar’s emergence, and corporate procurement of onsite solar," they explain.

Non-residential systems costs are said to have dropped by 6% from $3.43/Wdc in Q4 2014, to $3.23/Wdc in Q1, according to the companies’ bottom-up pricing model.

The utility-scale sector, meanwhile, saw a huge 644 MW of solar installed, or 49% of the new capacity in Q1. "Utility PV installations have now surpassed 500 MW for eight consecutive quarters," write the reports authors.

They add that national weighted-average system pricing for utility systems in Q1 came in at an average of $1.79/Wdc, a 4% increase from the $1.72 value tracked in Q4 2014. "This reported average is more reflective of the types of projects that came on-line in Q1 2015 than it is any indication of increased system pricing. From a bottom-up modeled perspective, we see fixed-tilt projects with installed costs of $1.58/Wdc and tracking projects at $1.80/Wdc."

Booming pipelines, looming deadlines

Like IHS, which today predicted that a massive 32 GW of utility-scale solar will come online in the U.S. by the end of 2016, when the Federal energy investment tax credit (ITC) expires, SEIA and GTM Research believe the looming deadline is spurring on a flurry of solar activity.

Expanding on the data available from IHS, the report says that 25 project developers have solar project pipelines totaling 100 MW or more. It calculates that 41.37 GW worth of projects have been contracted (PPA signed) or announced (pre-contract).

"Today’s report reveals just how important establishing and maintaining effective, forward-looking public policies, like the solar Investment Tax Credit (ITC), are to America," comments Rhone Resch, SEIA president and CEO.

Technology convergence

A key trend in the U.S. solar industry is technology convergence, according to the report. "Whereas distributed solar has historically been primarily a single offering to customers, solar developers and installers are increasingly seeking opportunities to combine solar with other technologies and services," write the authors.

Specifically, energy storage, load control, demand response and electric-vehicle charging were highlighted as the drivers of this convergence. The report adds that while in its infancy, as costs decrease, adoption will pick up, thus creating more integrated energy offerings.