A number of research firms have looked at what the extension of the U.S. Investment Tax Credit (ITC), which was included in a spending bill late Tuesday, would look like for the U.S. solar market. IHS has taken a different tack, and has looked at the implications not only for the United States but the global solar market.
The firm had released a forecast only two weeks ago, in which the U.S. solar market would surge to 17 gigawatts (GW) in 2016 and fall precipitously to 6.5 GW in 2017.
IHS says that if the ITC is extended per recent legislation, it expects 3-5 GW of utility-scale solar projects to shift their completion dates until after 2016. This would result in a 12-14 GW U.S. market in 2016 and a 13-16 GW market in 2017.
The company’s forecast was released the same day that GTM Research put out its ITC extension forecast. A major difference between the two is that even with ITC extension, GTM Research predicts a slight decrease in 2017, with recovery in 2018.
IHS also spelled out how U.S. market changes would impact its global forecast. Previously the company was predicting a 20% growth in the global solar market to 70 GW in 2016, and then a 10% decline to 63 GW. This would be the first annual decline in the global solar market in well over a decade.
However, with ITC extension IHS forecasts only 66-68 GW of solar PV installed in 2016, and for growth to continue in 2017 to 70-73 GW. There will of course be impacts in the years beyond 2017, and part of that impact is due to a clause that would allow PV projects that have begun construction to qualify.
IHS puts the current PV project pipeline in the United States at 58 GW, 20 GW of which have signed power contracts. The company says that a five-year extension of the ITC, including a gradual drop-down in the last two years, could allow this pipeline to be replenished at the current rate of 15 GW annually.
IHS notes that this will create a more stable environment for the global solar industry, noting that it was predicting a sharp fall in both solar hardware prices and overall system prices beginning in 2017.
ITC extension would change this. We expect a much more moderate decline in pricing over the next two years at least and a much more stable and predictable environment for the supply chain as a result, reads IHS’ statement.