2019 US Solar Market Outlook
By Carolyn Fortuna
What is happening in the US solar market, and what can we expect in US solar in the next 12 months?
The renewable energy sector remained robust in 2018, holding steady despite uncertainty about new tax and tariff policies. That’s really good news! Fundamental drivers of solar market growth are poised to continue in 2019 with many positive trends, such as emerging policies that support expanding investor interest in the solar sector as well as advancing technologies that boost solar energy’s value to the grid, asset owners, and customers.
While the current US administration is not focused on decarbonization, many others are filling in the gap. States, cities, communities, and businesses are responding with increasingly ambitious sustainability goals that are driving solar market growth forward, according to the Deloitte 2019 Renewable Energy Outlook. There’s a lot happening in the marketplace — smaller corporations are joining the corporate procurement market, oil and gas companies are moving solar into their energy mixes, and asset management companies have been foregrounding new opportunities for their clients for solar growth.
2018 Developments in Solar
Some of the core fundamentals that drove solar growth in 2018 were declining costs of solar generation, advances in battery storage technology, and grid operators’ growing expertise and expanding toolset for integrating intermittent renewable power into the grid.
The U.S. installed 1.7 gigawatts (GW) of solar PV capacity in Q3 2018 to reach 60 gigawatts (GW) of total installed capacity, enough to power 11.3 million US homes, according to the Solar Energy Industries Association (SEIA). While these numbers do represent a 15% year-over-year decrease and a 20% quarter-over-quarter decrease, many positive developments were moving solar in a positive direction.
For example, more than 200 mayors representing cities in every US state signed onto the Environment America Research & Policy Center’s “Mayors for Solar Energy” letter, embracing a collective vision for solar-powered communities. They are calling for solar energy to be a much larger part of our energy mix than it is today, saying that accelerating the growth of solar will reduce pollution, revitalize our communities, create jobs, and keep energy dollars in local economies. “Expanding solar power helps residents and businesses benefit from lower energy costs while providing more local control of energy and improving our communities’ resilience,” the letter states. The list of mayors who signed the letter spans the political spectrum, including 25 Republicans, as well as a broad range of city sizes and budgets.
US states drove many new policy initiatives in 2018 that benefitted solar. Across many states, policy makers are designing new rates (tiered and time-of-use) to drive solar-plus storage growth, the way net metering drove distributed solar in the past. 23 green tariffs in 17 states have been proposed or approved to facilitate US corporate renewable procurement.
The business sector contributed to positive news for solar in 2018, too. Utilities demonstrated strong voluntary demand to jump into solar, as opposed to the demand driven by policy mandates in prior years. Partially, this is because falling costs and maturing technologies are multiplying opportunities to add value to solar and other renewables by combining them with energy storage and helping them to compete with conventional technologies. In fact, a solar-plus-storage project outbid a natural-gas peaking plant in February, 2018 to provide peaking services in Arizona.
As of this writing, 161 corporations across the globe, including many headquartered in the US, had committed to achieving 100% renewable power as part of the RE100 campaign.
Forecasts for Solar Markets: 2019+
The US Department of Energy’s Energy Information Administration (EIA) projects in its “Short Term Energy Outlook” that solar generation will move from 211,000 MWh per day in 2017 to 260,000 MWh/d in 2018, a 23% increase, and to 290,000 MWh/d in 2019, another 12% increase.
And that’s a conservative estimate. The Solar Energy Industries Association anticipates that total installed US PV capacity is will more than double over the next 5 years, and by 2023, over 14 GW of PV capacity will be installed annually. With installations rising to around 240 GW by 2030, Credit Suisse also is seeing strong markets in the Middle East, Europe, Latin America, and the US. Developers may hasten to begin solar project construction by year end to qualify for federal tax credits before the US investment tax credit for solar falls from 30% to 26%. The solar tariff is scheduled to decline 5% annually, eventually falling to 15% in year 4.
In addition to heightened consumer demand, lower costs will also drive renewed interest in utility-scale solar. According to Ryan Sanders, chair of the Georgia Large Scale Solar Association, “The utility-scale solar market will continue to consolidate and grow, as well-capitalized firms benefit from the federal ITC step down, and utility companies become smarter and more bullish about integrating solar on to their energy grids. These forces will continue to drive the cost to deploy solar down.”
The solar-plus-storage news is quite positive, too. Installations are likely to gain traction as software platforms enable aggregators to pool resources and use them to offer grid support services in wholesale markets. Given battery storage’s versatile use across the electricity value chain, its long-term sustained development may require greater coordination of federal and state policies.
Targets for 100% Renewable Energy Rely on Solar
Today, half of the states with renewable portfolio standards (RPS) targets are poised to reach their goals by 2021, and several are mulling an increase in their targets. A few are even altering their original plans so that 100% renewables are in sight.
Across the US over 90 cities, 10+ counties, and 2 states have already adopted ambitious 100% clean energy goals. The Sierra Club is capturing this ambitious pattern with its Ready for 100 project, and solar plays a significant part in making 100% renewable energy a reality. Six cities in the US — Aspen, Burlington, Georgetown, Greensburg, Rockport, and Kodiak Island — have already hit their targets. These cities now generate 100% of the energy used community-wide from clean, non-polluting, and renewable sources that rely on solar as an essential element of the mix.
The solar power market is global, and solar panels and associated hardware for residential and business applications are essentially the same as those for the largest PV utility scale projects. Local prices and availability depend on worldwide demand and activity. That means the combination of federal policy, utility responses, and global activity lead many to predict that solar energy installations in 2019 will exceed those in 2018. So, an already busy market will get busier.
Programs
A typical residential solar PV panel system in the US costs $3.60/watt after installation, and solar panels typically save the customer over $20,000 (net) over the course of 20 years. Deciding to go solar is not just an excellent decision to help improve the environment; it’s a practical and sound investment with far less financial risk and potentially better returns than buying stock market shares.
Sometimes a solar lease or solar PPA with $0 down is best for a customer. Sometimes a solar loan is best. Programs such as community choice aggregation (CCA), which bring residents, businesses, and municipal accounts together to procure energy, are increasingly driving renewable growth and new business models with community solar developers.
Solar Powering America is an interagency initiative between the US Department of Energy (DOE), US Department of Agriculture (USDA), US Department of Housing and Urban Development (HUD), and the Environmental Protection Agency (EPA) to support greater solar deployment. Each agency’s unique and independent solar programs are featured in Solar Powering America’s online resource library for use by the solar community. Check it out here if you’re interested in learning more about solar programs that might be right for you
This article is supported by InterSolar. Intersolar North America, North America’s premier exhibition and conference, is the perfect place to explore the megatrends driving the solar industry first. It’s the industry hotspot to discover the latest trends in photovoltaics, PV production technologies and solar heating and cooling. Co-located with ees North America, Intersolar North America sit at the cross-section of solar technology, energy storage, and smart renewable energy
Photo Credits: banner and event images from InterSolar; solar panel image by skeeze and sunset image by bones64 on PixaBay (CC BY-SA 2.0 license)
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