Today GTM Research and the Solar Energy Industries Association (SEIA) have released a new report in which they predict that the U.S. solar market will more than double in 2016 to reach 16 GW. This is a slight increase from the two organizations forecast in their Q3 2015 report on the U.S. market, which predicted that at least 15 GW would be installed.
16 GW is more than any nation has installed in one year to date, and based on the forecasts of multiple analysts this would to push the United States ahead of Japan to become the second-largest solar market on earth, at least for the year.
GTM Research says the increase in its forecast is due to greater clarity. First, a number of projects have landed (construction) agreements or commenced construction ahead of schedule, which has played a part in our upward revision to the utility scale PV forecast, notes GTM Research Solar Analyst Cory Honeyman.
Second, since the Q3 2015 report, additional small utility scale solar projects with quicker development timelines in the 1 MW to 50 MW range have continued to land (power contracts) with 2016 completion dates, which has boosted the outlook as well.
However, this is a temporary surge, and GTM Research predicts that the U.S. market will fall back to around 10 GW in 2017. This spike in installations says a lot about the impact of incentive cliffs.
Developers and contractors prepared to build a massive amount of solar PV before the anticipated drop-down of the U.S. Investment Tax Credit (ITC) at the end of 2016. And while the 30% ITC was extended for another three years at the end of 2015, the long lead times for utility-scale PV projects means that many of these will still be completed before the end of the year.
As such, utility-scale PV projects will dominate the 2016 U.S. market, which GTM Research estimating that these will make up 74% of the market during the year. However, the company expects all market segments to grow.
Following the extension of the ITC, GTM Research says that state-level policies will move to the forefront of concerns, and that state-level factors will be the biggest drivers in 2016 and coming years.
The company names community solar programs, corporate procurement of off-site solar and the ongoing debate over distributed PV policies as the three key trends to affect rooftop solar throughout the year.
Another significant trend alluded to in the report is that more and more utility-scale solar PV is being procured for economic reasons, outside of state renewable portfolio standard (RPS) policies. In a report issued earlier this month, GTM Research predicted that half the utility-scale solar installed in the U.S. this year will be outside of RPS requirements.