Trade case, tight global supply of modules drive up prices in all segments

BOSTON and WASHINGTON, Dec. 14, 2017 /PRNewswire-USNewswire/ — The U.S. installed more than 2 gigawatts (GW) of solar photovoltaics (PV) in the third quarter of 2017. That’s despite experiencing higher prices across all market segments and major policy uncertainty.

US SOLAR MARKET INSIGHT REPORT

In their latest U.S. Solar Market Insight report, GTM Research and the Solar Energy Industries Association (SEIA) said prices rose. All due to a tight global supply of modules and uncertainty around the Section 201 trade case. A case now being weighed at the White House.

In all, 2,031 megawatts (MW) of PV were installed in the U.S. in the third quarter of the year. So that’s the eighth consecutive quarter. I mean that the solar industry added more than 2 GW.

The capacity additions represent a 51 percent drop year over year.

The cumulative YTD comparison puts the industry down 22 percent compared to this point last year – which is in line with the expected 21 percent decline for all of 2016 vs all of 2017.

GTM Research forecasts that 11.8 GWdc of new PV installations will come on-line in 2017, down 22 percent from a record-breaking 2016. The forecast has been adjusted downward from 12.4 GW last quarter. All to reflect continued challenges in the residential market and a push back in utility-scale completion timelines. Especially due to uncertainties surrounding the trade case.

Utility-scale projects accounted for 51 percent of the quarter’s installed capacity, but it was the non-residential market that was the standout.

The non-residential segment grew 22 percent year-over-year, installing 481 MW in Q3. Non-residential consists of commercial and industrial businesses. That’s installs of solar on nonprofits, and community solar programs.

In addition California, Massachusetts and New York all posted strong quarters. All the while Minnesota had its largest quarter ever due to its robust community solar program. Nationwide, community solar capacity is on track. All most interestingly to grow by more than 50 percent year-over-year.

Furthermore, the utility-scale segment was led by Nevada, North Carolina and Texas. In fact, Texas installed more solar in the third quarter of this year. That’s more than the state installed in the entirety of 2015. Meanwhile, emerging markets in the Southeast, including Florida, Mississippi, and South Carolina all had strong quarters. Moreover they are forecasted to install more solar in 2017 than any year previously.

The report says 4 GW of utility-scale PV projects are currently under construction. All across the nation. Moreover GTM Research forecasts an additional 3.9 GW will come on-line by the end of the year. This would make 2017 the second largest year ever for solar installations. All behind only the record-shattering 2016.

Despite more than half of U.S states now being at grid parity. For that’s meaning the levelized cost of energy is below electricity bill savings in year 1 of system life. Also the U.S. residential segment posted its lowest solar installation total since the first quarter of 2015.

The report attributes the slowdown to two key factors:

persistent nationwide customer acquisition challenges and a pivot by major solar installers that are pursuing profitable sales channels over growth.
This has been particularly acute in mature markets that account for the majority of installation volumes.

Several markets, however, experienced record quarters for the residential solar segment. These include New Mexico, Washington D.C., Virginia and Idaho. Meanwhile, emerging markets, such as Florida and Pennsylvania, are expected to surpass 50 MW of residential capacity for the first time ever this year.

Looking forward to 2018 and beyond now. I mean both Section 201 remedies and corporate tax reform present considerable downside risk to the industry’s base-case forecasts. However, at present, neither issue will be incorporated into GTM Research’s. Because existing outlook until President Trump issues a formal decision on Section 201 trade remedies and the U.S. Congress votes on corporate tax reform legislation.

Key findings from the report include:

• In Q3 2017, the U.S. market installed 2,031 MWdc of solar PV. That’s a 51% decrease year-over-year from Q3 2016. Through the end of Q3, installations are tracking 22% behind the pace set. All through the same period during a record-breaking 2016.

As well and through the first three quarters of 2017, 25% of all new electric generating capacity brought on-line in the U.S.. For it also has come from solar. Thereby ranking second over that period only to natural gas.

Moreover in the Section 201 safeguard case, the U.S. International Trade Commission (U.S. ITC) failed to achieve a formal recommendation of trade relief. All on foreign-manufactured crystalline silicon cells and modules. Rather, individual commissioners also suggested to the Trump administration three sets of remedies.

All at levels below the petitioners’ requests. Also President Trump has until January 26 to decide the outcome of the case.

Also Q3 2017 saw price increases across all market segments for the first time since this report series’ inception. That’s stemming from increases in module costs due to a global shortage of Tier 1 module supply and the Section 201 petition.

In addition, the residential PV sector fell 10% quarter-over-quarter. Declining growth is driven by weakness in California and major Northeast markets. All which continue to feel the impact of pull-back from national providers.

In contrast to residential PV, the non-residential sector grew 22% year-over-year. For that’s primarily driven by regulatory demand pull-in. All from looming policy deadlines in California and the Northeast. In addition to the continued build-out of a robust community solar pipeline in Minnesota.

Also, voluntary procurement continues to be the primary driver of new utility PV procurement. All in 2017 accounting for 57% of new procurement through Q3.

Also GTM Research forecasts that 11.8 GWdc of new PV installations will come on-line in 2017. That’s down 22% from a record-breaking 2016. Our forecast has been adjusted downward from 12.4 GWdc last quarter. That’s to reflect continued challenges in the residential market and a push back in utility-scale completion timelines. All due to uncertainties surrounding the trade case.

In addition, total installed U.S. PV capacity is expected to more than double over the next five years and by 2022. For that’s nearly 15 GW of PV capacity will be installed annually.