Once a year, the reporters at Greentech Media and the GTM Research team gather in San Diego with members of the solar community for the U.S. Solar Market Insight conference. The participants take a look back at the year in U.S. solar and offer projections for future growth. Inovateus not only attended and sponsored the event this year, but our very own TJ Kanczuzewski shared the stage with other industry leaders on a panel about how to scale commercial solar.
We’ll give some takeaways on TJ’s panel later in this post, but first, here are some key insights from the conference.
Solar Equipment Costs Fall, Installation Demand Rises
Overall, it’s been another great year for the U.S. solar industry. Deployment continues to flourish across all three major sectors—utility, commercial/industrial and residential–thanks to lower installation costs that can be largely attributed to the current market oversupply of solar panels.
The effect of lower equipment costs makes installing solar attractive for all sectors, especially when the 30% investment tax credit and other incentives are taken into consideration. When combined with solar power purchase agreement (PPA), loans and other financing, consumers, businesses, municipalities and utilities can reduce their electricity costs over 20-plus years with minimal upfront costs. If you’re a solar integrator buying equipment or you’re looking to install solar for any purpose, now’s a great time to do business. That’s the good news.
Lower Installed Prices Has Negative Side for Manufacturers
But there’s a negative side to the current market conditions. While lower solar equipment costs greatly benefit the end-users—prices have dropped about 35% since Q4 2015–the rapid panel price decline and supply glut weaken or eliminate profitability for solar panel and vertically integrated manufacturers, which in turn puts pressure on solar stock prices. In fact, solar company share prices have slipped an average of 40- 70% for the year, underscoring Wall Street bearishness on many high-profile solar stocks.
GTM researchers also reported a slowdown in the growth of installations in the traditional solar markets in the West and other early adopter states in the East and Mid-Atlantic areas. The good news for manufacturers and installers is that the same lower solar prices are helping to grow the Midwest, Southeast and Southwest regional markets that have lagged behind California and other traditional U.S. markets.
New Ways to Go Solar
Another bright spot cited by conference participants is the creation of new solar market sectors, which feature different types of financing and policies that help more consumers, businesses and utilities benefit from solar. In particular, GTM researchers are forecasting community choice aggregation (CCA), community solar, solar-plus-energy storage, and offsite corporate solar will help fill in the gaps caused by slowdowns in traditional markets.
Small Residential Installers Increase Market Share
Another factor that we’re noticing here in the Midwest market is that—as a group—small residential solar companies are beginning to gain market share, installing more solar than the collective installations of the big national brands.
According to GTM analysts, the top three solar installers’ businesses increased 10% in the second quarter compared to Q2 last year. By contrast, the aggregate of other residential installers surged 53% percent in Q2 2016 compared to the same period in 2015. When GTM included top leaders and all other installers in the same bucket, the overall residential Q2 market grew by 26%.
For the utility sector, GTM forecast that growth will be driven by expansion into the new geographies. They project 10 GW of utility solar will be installed this year, slipping to 8 GW in 2017, dipping to 6 GW in 2018, but then rebounding to 7 GW again in 2019.
Solar Storage for Businesses
As for the commercial and industrial sector, TJ and his “Scaling Commercial Solar” co-panelists echoed much of the analyses of GTM researchers, projecting that there will be an increasing demand for solar-plus-energy storage for businesses wanting to reduce their demand charges and have more control over their electricity bills.
TJ stressed the importance of commercial solar installers like Inovateus aligning with innovative storage partners, so that they can offer the best and most reliable solar technology to businesses willing to become early solar-plus-storage adopters.
Obviously, the economics of energy storage must make financial sense for commercial solar installers to accelerate its adoption. However, TJ told the audience that storage can be positioned as a very attractive added value to potential customers that were initially just looking to go solar. For now, the areas with high electricity rates and exorbitant commercial demand charges will be the most attractive storage markets. But TJ believes that as battery prices decline, storage will become a standard offering for commercial solar customers.
In summary, while the U.S. solar market’s growth in 2016 may be slowing down compared to the past few years, lower installed costs and the advent of storage ensure that the industry will continue to expand at a steady pace.
By Mauricio Anon, brand ambassador, Inovateus Solar
