GTM Research forecasts U.S. solar to be essentially flat in 2018. With nearly two-thirds of the 2018 utility PV pipeline consisting of relatively less price-sensitive renewable portfolio standard projects and projects currently in construction that secured tariff-free modules (either crystalline-silicon PV delivered before the tariffs went into effect or non-subject thin-film or domestically produced modules), tariff impacts on 2018 will be somewhat mitigated. The non-residential market will fall as a pipeline of projects grandfathered in under a more favorable policy and incentive environment wanes in 2018. Residential PV is expected to be flat given lingering weakness in major markets, which will lead to these markets seeing flat growth or contraction this year.
In the medium term, more price-sensitive procurement drivers such as PURPA and voluntary procurement by utilities (i.e., projects made viable due to their economic competitiveness) will not pencil out under increased price assumptions due to the Section 201 module tariffs. The utility segment is still expected to grow 5% in 2019, but growth will be relatively flat from 2021-2022 as the declining module tariffs delay projects that were initially slated for completion in 2020-2021. Going forward, utility PV will continue to be driven by procurement outside renewable portfolio standards, with more than 75% of the current pipeline coming from voluntary procurement, PURPA, offsite corporate procurement, and California-based community-choice aggregators.
For residential PV, the widespread customer-acquisition issues in major state markets that afflicted the segment in 2017 are only exacerbated in an increased pricing environment.
This is especially true for large national installers scaling back expensive sales channels and transitioning to lower-cost customer-acquisition strategies in pursuit of profitability. These challenges are expected to continue in the near term for large national installers, though 2018 is expected to represent the bottoming out of this trend as more local installers grow to capture larger shares of the market.
Flat growth forecasted for 2018 allows for a more robust rebound in 2019 as the market aligns to the growth expectations of small and medium-sized installers leveraging less expensive customer-acquisition channels. Growth rates exceeding 10% are expected to resume in the early 2020s, in part bolstered by the California mandate for all new residential housing to include rooftop solar, in addition to emerging markets beginning to account for a larger share of the residential segment, while ITC demand pull-in will boost growth in 2021 ahead of its expiration in 2022.
Meanwhile, the non-residential PV market is expected to experience two consecutive down years as the grandfathered project pipeline wanes in 2018 and the market acclimates to a reduced incentive environment across major state markets in 2019. However, this will be incrementally offset starting in 2020 as the next wave of states with robust community solar mandates – New York, Maryland, Illinois – begin to see the realization of those pipelines. Solar-plus-storage viability will also begin to have an impact on non-residential demand.
By 2020, 28 states in the U.S. are expected to be 100+ MWdc annual solar markets, with 25 of those states being home to more than 1 GWdc of operating solar PV. This compares to only two states with 100+ MWdc annual solar markets in 2010.
Credit: SEIA/GTM Research U.S. Solar Market InsightTM Report