5 Numbers That Will Shape the Future of US Solar in 2015 and 2016
Numerical highlights from Solar Analyst Cory Honeyman’s Solar Summit presentation
April 20, 2015
Closing out last week's Solar Summit Conference in Phoenix, Senior Solar Analyst Cory Honeyman shared GTM Research's outlook on the U.S. solar market with the 600 energy professionals in attendance.
To set the stage, Honeyman noted that 94 percent of all U.S. PV installations came on-line between 2010 and 2014. In the same time period, solar's share of new generating capacity grew from 4 percent to 32 percent, second behind only natural gas last year.
Framing GTM Research's outlook of U.S. solar over the next two years, Honeyman identified "five numbers that tell you everything you need to know about U.S. solar in 2015 and 2016."
5.7 gigawatts
The first number of note is the 5.7 gigawatts of utility-scale solar procured by utilities outside of RPS obligations.
Honeyman cited what's driving this growth: PURPA rules, utility-owned generation, merchant solar, bilateral contracts, and utility RFPs. As the map below shows, non-RPS growth is not limited to any particular region -- it's a nationwide trend.
3.5 gigawatts
Honeyman's second number, 3.5 gigawatts, is the amount of utility-scale solar with PPAs that start after 2016 but which are planning to come on-line before the federal ITC drops to 10 percent.
14 states at the tipping point
GTM Research identified 14 states that have reached a residential solar "tipping point," meaning they are economically viable for the system owner.
More specifically, these are markets where direct ownership of a PV system has a 10-year payback period (or better), in addition to offering savings of at least 10 percent in the system's first year of use.
Honeyman noted that a number of major installers have opened offices in up-and-coming residential solar states like South Carolina, New Mexico and Nevada. However, Honeyman cautioned that California made up half of all U.S. residential solar in 2014 -- and that the market will remain consolidated across a small number of states through at least 2016.
21 states where compensation for PV is eroding
Change is afoot in the U.S. residential solar market. Honeyman described 21 states where utilities or legislatures have proposed lowering compensation for residential solar.
The proposed rate-design reforms can be grouped into five key archetypes: a value-of-solar tariff, peak demand charges, revised net metering compensation, minimum bills, and fixed charges. State-level policy changes will have major impacts on markets in the coming years.
3 big growth opportunities for commercial solar
Finally, Honeyman described three ways commercial solar will make a comeback in 2015: small-scale commercial, community solar, and Fortune 500 partnerships.
Commercial solar is slated to grow 40 percent over 2014 levels this year. GTM Research forecasts the U.S. to install 8.1 gigawatts of PV in 2015 and 11.8 gigawatts in 2016.
Global solar demand in 2015 to hit 57GW on strong 30% growth rate – IHS
31 March 2015
Market research firm IHS has revised down global solar PV installations for 2014 but forecasts significant increase in demand for 2015.
According to IHS, global solar PV installations in 2014 reached 44.2GW, compared to its last published forecast of installs reaching 45.1 GW, a 14% increase over 2013.
One of the reasons for the lower than expected installs in 2014 was the decline in demand within European countries, despite record installs in the UK that made it the biggest market in Europe for the first time.
IHS said that European solar demand in 2014 declined by 30% to 7.9GW.
In contrast, the largest absolute growth was said to have occurred in the APAC region, which was said to have increased by 5.5GW to reach 26.4GW in 2014 and accounted for 60% of total global demand. China and Japan were the two largest markets in 2014.
China chimes
IHS importantly noted that based on its project analysis, China installed 12.6GW of new solar capacity in 2014.
The market research firm said that that the official estimate from China's NEA of 10.6GW represented the sum of PV projects connected to the grid but in AC terms.
However, IHS market data is logged on actual installations and in DC terms. Numerous media reports and several market reports have taken the NEA figures for China at face value.
Bullish on US
In contrast to installation figures recently published by GTM/SEIA that indicated US demand reached 6.2GW in 2014, lower than previous guidance, IHS said that US solar PV installations reached 7GW in 2014.
Key 2015 forecast data
According to IHS global PV market demand is set to increase by 30% in 2015 to 57.3GW, doubling growth of 14% in 2014, which it said was based on a bottom-up analysis of more than 100 countries. The tracker is the first combined forecast from IHS and Solarbuzz, which it acquired in November 2014.
IHS noted that it had raised its demand forecast for China in 2015 to 17.3GW and lower than China’s NEA guidance for connected AC capacity by province, yet China remains the largest market by some margin.
IHS also forecasted that Japan would retain its position as the second largest solar market in 2015 with installations reaching 10.4GW, an increase of 4%, compared to 2014.
The third largest market is expected to be the US with installations exceeding 9GW in 2015.
A welcome surprise in the preliminary forecasts from IHS is that the UK is expected to become the fourth largest market in 2015. IHS noted that it expects 3.5GW of installations in the UK in 2015, driven largely by the rush to beat the ROC deadline at the end of March 2015. UK installs reached around 2.3GW in 2014.
In regards to the European market, IHS said that a rebound in demand was expected in 2015, noting that installs were forecasted to reach 9.4GW.
Longer-term growth
According to IHS, PV installations are forecast to increase at a compound annual growth rate (CAGR) of 10.5% over the next five years to reach 73GW in 2019.
However, IHS has cut its forecast for global PV installations by 1.5GW in 2018, which it said was due mainly to a 3GW reduction in its outlook for the European market. IHS still forecasts more than 50 GW of new PV capacity to be installed in Europe over the next five years.
However, strong demand momentum in APAC was said to partly offset the lowered European demand forecast, according to IHS.
Market confusion
Preliminary market demand reports from the likes of EPIA and the International Energy Agency Photovoltaic Power System Programme (IEA PVPS) claim installations reached 40GW and 38.7GW, respectively, up moderately from around 37GW in 2013.
Both are using China’s NEA figures of grid connections in the largest market reaching 10.6GW in 2014.
In contrast, IHS has installations in China reaching 12.6GW in 2014 and Bloomberg New Energy Finance (BNEF) recently raised its 2014 figure to 13GW.
BOSTON — Applauding a record-breaking year, GTM Research and the Solar Energy Industries Association (SEIA) released the U.S. Solar Market Insight 2014 Year in Review, a source of installation data, forecasting, and policy analysis for the U.S. solar market. Newly installed solar photovoltaic (PV) capacity reached a record 6,201 megawatts (MW) in 2014, growing 30 percent over 2013’s total. An additional 767 MW of concentrating solar power (CSP) came online in the same period.
Solar accounted for 32 percent of the nation’s new generating capacity in 2014, beating out wind energy and coal for the second year in a row. Only natural gas constituted a greater share of new generating capacity.
In 2014, for the first time in history, each of the three major U.S. market segments — utility, commercial, and residential — installed more than a gigawatt (GW) of PV.
The U.S. utility-scale segment broke the GW mark in 2011 and has since grown by nearly 1 GW annually. In 2014, 3.9 GW of utility-scale PV projects came online with another 14 GW of projects currently under contract.
The commercial segment in the U.S. also first installed more than 1 GW in 2011 but has not shared the same success as the utility-scale segment. In 2014, the commercial segment installed just more than 1 GW, down 6 percent from 2013. The report notes: “Many factors have contributed to this trend, ranging from tight economics to difficulty financing small commercial installations.” But GTM Research expects 2015 to be a bounce-back year for the commercial segment, highlighted by a resurgence in California.
The U.S. residential segment’s 1.2 GW in 2014 marks its first time surpassing 1 GW. Residential continues to be the fastest-growing market segment in the U.S. with 2014 marking three consecutive years of greater than 50 percent annual growth.
“Without question, the solar Investment Tax Credit (ITC) has helped to fuel our industry’s remarkable growth. Today, the U.S. solar industry has more employees than tech giants Google, Apple, Facebook, and Twitter combined,” said Rhone Resch, president and CEO, SEIA. “Since the ITC was passed in 2006, more than 150,000 solar jobs have been created in America, and $66 billion has been invested in solar installations nationwide. We now have 20 GW of installed solar capacity — enough to power 4 million U.S. homes — and we’re helping to reduce harmful carbon emissions by 20 million metric tons a year. By any measurement, the ITC has been a huge success for both our economy and environment.”
GTM Research forecasts the U.S. PV market to grow 31 percent in 2015. The utility segment is expected to account for 59 percent of the forecasted 8.1 GW of PV.
“Solar PV was a $13.4 billion market in the U.S. in 2014, up from just $3 billion in 2009,” said Shayle Kann, senior vice president at GTM Research. “And, this growth should continue throughout 2015, thanks to falling solar costs, business model innovation, an attractive political and regulatory environment, and increased availability of low-cost capital.”
Additional key findings include:
• The U.S. installed 6,201 MW of solar PV in 2014, up 30 percent over 2013, making 2014 the largest year ever in terms of PV installations;
• Solar provided roughly one-third of all new electric generating capacity in the U.S. in 2014;
• More than one-third of all cumulative operating PV capacity in the U.S. came online in 2014;
• By the end of 2014, 20 states eclipsed the 100 MW mark for cumulative operating solar PV installations, and California alone is home to 8.7 GW;
• For the first time ever, more than half a GW of residential solar installations came online without any state incentive in 2014;
• Growth remains driven primarily by the utility solar PV market, which installed 1.5 GW in Q4 2014, the largest quarterly total ever for any market segment;
• PV installations are forecast to reach 8.1 GW in 2015, up 59 percent over 2014;
• 2014 was the largest year ever for concentrating solar power, with 767 MW brought online. Notable project completions include the 392-MW Ivanpah project. Genesis Solar project’s second phase of 125 MW and Abengoa’s Mojave Solar (250 MW) project achieved commercial operation in December 2014;
• All solar projects completed in 2014 represent $17.8 billion in investment ($13.4 billion in PV and $4.4 billion in CSP); and
• As of the end of 2014, cumulative operating PV in the U.S. totaled 18.3 GW and cumulative operating CSP totaled 1.7 GW.
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