The extension of the solar Investment Tax Credit (ITC) at the end of last year is spurring optimism over the U.S. solar market. However, according to the market analysts at IHS, the late extension of the ITC means that there will still be fluctuations in the nations solar market in 2016 and 2017.
Today IHS forecast that the U.S. market will grow 60% in 2015 to reach 15 GW, before falling 30% in 2017 to around 10.5 GW.
The spike and then contraction will be due to the long lead-times for large utility-scale solar projects. A number of these projects were planned to come online before the scheduled ITC drop-down at the end of 2016, and developers planned very few projects for the following year.
Even before ITC extension, GTM Research was predicting a boom year in 2016 followed by a modest market contraction. If IHS and GTMs predictions are correct, 2017 will be the first year that the U.S. solar market will decline year-over-year in at least a decade.
These predictions show how even though the ITC was extended, the threat of the drop-down still caused a significant interruption in the nations solar market.
"2017 is predicted to be a year in which utility-procurement programs are reassessed and new requests are issued as utilities seek to take advantage of increasingly competitive PV technology in their generation mixes," says IHS Technology North American Solar Analyst Camron Barati.
"While policy driven mechanisms such as renewable portfolio standards (RPS) will continue to be a primary driver of increased utility-scale PV procurement, non-RPS demand is significantly picking up in emerging state markets as well."
Both IHS and GTM Research predict that the U.S. solar market will grow steadily after 2017.
IHS also provided some information on geography, forecasting that the Western and Southwestern states will account for 2/3 of the solar installed in 2016, with California, Texas and Nevada each installing over 1 GW.
During 2017, IHS expects Northeastern states to be the least affected by the contraction, given that the markets in these states are dominated by distributed solar, not utility-scale.
Correction: An earlier version of this article mentioned GTM Research's predictions for the Northeastern United States, but this analysis was provided by IHS, and the sentence has been changed to reflect this.
This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: firstname.lastname@example.org.