The numbers don’t lie: 2016 was the biggest year ever for U.S. solar. According to the new “U.S. Solar Market Insight: 2016 Year in Review” report issued by the Solar Energy Industries Association (SEIA) and GTM Research, 14.76 GWDC of solar was installed across the three main market segments—utility, commercial/nonresidential, and residential—representing a 97% increase over 2015.
The main driver was the utility sector, which accounted for more than 10 GWDC of the total. In fact, the amount of utility solar installed was more than that deployed across all sectors in 2015. Looking at the recent historical data, in 2011, the total amount of PV installed in the U.S. was 1.92 GWDC (the first gigawatt-plus year); in other words, the market increased 7.8x over the last several years. The word that comes to mind when I read those numbers and see the accompanying hockey-stick-like growth graphs is exponential.
Here are a few other fun facts from the report. For the first time, solar PV ranked as the number-one source of new electrical generation capacity in the U.S., with 39% of the total compared to natural gas’ 29% and wind’s 26% (and coal’s zero percent for the second year in a row). Back in 2011, solar accounted for a mere 8% of new capacity. Last year, a new megawatt of solar capacity came online, on average, every 36 minutes. So when you’re watching those NCAA tournament basketball matchups over the next month or so (March Madness!), that’s nearly 4 MW per game—and closer to 5 MW if the game goes to double overtime.
A deeper dive into the report reveals some interesting trends. For example, the utility sector has largely moved away from state renewable portfolio standards (RPS) as a market driver. About 64% of current projects in development are fueled by non-RPS mechanisms—and non-RPS-driven projects make up almost all new procurement. “Altogether, the continued rise in non-RPS procurement stems from the growing number of geographies where utility solar is now a cost-competitive resource compared with new-build natural gas alternatives,” the report says.
The utility PV pipeline numbers offer reasons for guarded optimism. With 24.45 GWDC utility solar power plants installed and operating as of the end of last year, another 17.79 GWDC of projects were contracted with power purchase agreements; more than 4 GWDC of those were already under construction by year’s end. The big number, however, was the 35.8 GWDC of projects announced but without contracts. As with any list of future projects, the installed capacity of solar farms that actually gets built will be far less than those big digits.
Looking forward, there will be no doubling of the market in 2017, with annual installations forecast to slip slightly to 13.2 GWDC—and the “bedrock” utility sector making up 66% of that total. Modeled average PV system pricing will continue to drop across all sectors, but not plummet like it did in 2016. Don’t expect a repeat of the solar module oversupply-underdemand imbalance that shocked the upstream suppliers and thrilled the installer community with a 40% decrease in cost-per-watt module pricing between Q4 2015 and Q4 2016.
While the 2017 forecast may not be as robust as 2016, we’re confident that solar in the Midwest and beyond will continue to create jobs and replace fossil fuels. In short, our Inovateus mission to “build a brilliant tomorrow” continues. We look forward to working with our partners and customers to bring solar to more businesses, schools, utilities and homes.
By Nathan Vogel, director of strategy, Inovateus Solar
