GTM Research: The U.S. to install more than 3 GW of solar PV during Q4


The rush to complete solar projects before the drop-down of the federal Investment Tax Credit at the beginning of 2017 is creating a boom in the U.S. solar market, as shown by the latest U.S. Solar Market Insight Report.

The report, co-authored by GTM Research and the Solar Energy Industries Association (SEIA), predicts that the U.S. will install 3 GW during Q4 2015 alone, and 15 GW over the course of 2016.

The organizations are reporting that developers have signed power purchase agreements (PPAs) for 18.7 GW of utility-scale solar PV projects which have yet to come online. Among these, 5.7 GW are already under construction.

These dazzling numbers stand in contrast to a relatively slow quarter during Q3. While this was the eighth consecutive quarter with more than 1 GW installed, total market volume was slightly below the previous quarter and the third quarter of 2014.

This was due to a dip in utility-scale project completions during Q3 2015. Such fluctuations from quarter to quarter say little about market conditions and are far from unusual. This phenomenon also impacts the quarterly results of utility-scale solar project developers.

Regardless, GTM Research and SEIA have slightly lowered their overall market forecast for 2015 from 7.7 GW to 7.4 GW.

The non-residential segment, which includes commercial, industrial and government installations, showed slight growth but remains the smallest of the three with under 240 MW installed.

Residential installations continued their path of steady growth, with 558 MW coming online during the quarter. This is despite the much higher per-watt cost of residential PV compared to other market segments.

During Q3 GTM Research put the average installed cost of residential systems at above US$3.50 per watt, compared to $2.07 per watt for non-residential systems, and $1.38-1.59 per watt for utility-scale systems, depending on whether or not they incorporate tracking.

Additionally, residential system prices are not showing the steady declines seen in other system types. This may be because nearly half the cost of residential systems is not hardware or installation labor related, and includes finance, selling and administrative costs, as well as profit, for residential solar providers.

"While installation costs for residential solar are relatively higher than commercial and utility scale, it's worth keeping in mind that the value proposition of residential solar remains extremely attractive given retail rate design and net metering policies," notes GTM Research Solar Analyst Cory Honeyman, the report's lead author.

"The roles played by national residential solar companies with high velocity salesforce and installation crews, plus favorable rate design and net metering policies have been a recipe for consistently strong growth."

During Q3 California again represented nearly half the total U.S. solar market, however the next two states by volume are facing challenges to their solar markets due to policy changes.

North Carolina has remained the nation's second largest solar market, but this is unlikely to be the case in 2016 as the state's lucrative solar tax credit is set to expire at the end of this year.

During Q3 Massachusetts was the third-largest solar market, an increase from its fourth-place position during 2014. However, Massachusetts' legislature recently failed to lift caps to net metering, which have already been hit in the service areas of some utilities.

PV projects smaller than 25 kW that use three-phase inverters are exempted from Massachusetts' net metering caps, as are projects under 10 kW with single-phase inverters. However, as the state allows “virtual” net metering and the policy applies to systems up to 2 MW the state's booming market for community solar may be impacted, as well as the mid-sized and large commercial segment.

As a result, the ranking of leading PV markets could see a shake-up in the coming quarters, however this is unlikely to have too much of an impact on nationwide market volumes given the dominance of California's market and the enormous amount of utility-scale solar already under contract.

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