According to the Solar Energy Industries Association (SEIA), the US solar energy market has enjoyed a phenomenal year – adding 14,626MW of generation capacity in 2016. That’s an increase of 95% compared to 2015, which saw solar take the top spot in total energy additions in the US. While great news for environmentalists, the figures will make VCs and OEMs salivate, thanks to the huge potential impetus for smart grid investments.
The growth now leaves solar at around 40GW of capacity total – across utility projects, residential installations, and the non-residential (community and commercial) projects. The SEIA says there are around 1.3m installations in the US.
Due to the different distribution architectures required for accommodating renewables in utility grids, utilities and energy wholesalers will need to invest a lot of money into the electrical grids and the Advanced Metering Infrastructure (AMI) needed to monitor and control energy consumption. This transformation is a huge opportunity for those peddling their wares in the smart grid markets.
Solar’s rise comes as coal is being pummeled by falling natural gas prices, and the 2,250MW Navajo coal plant in Arizona has just had the door closed on it – citing gas as the main culprit. While oil still plays a huge role in fueling automobiles, it is being used less and less in electricity generation, and nuclear is largely flat.
However, the falling price of renewable generation is the death-knell for coal. In the past year, solar and wind have achieved price-competitiveness in some key US markets, and utilities are increasingly turning to renewables as a way to replace their fossil-fuel generation assets – which are slowly being priced out of the market.
The SEIA findings, carried out by Greentech Media suggest that the 2016 growth was driven by utilities hedging against changes in the federal Investment Tax Credit (ITC) – a 30% credit that managed to secure a multi-year extension in 2015, following SEIA lobbying. The utility-scale segment was the fastest growing solar market, posting 145% growth compared to 2015.
For total New Capacity Additions (NCA), solar grew to account for 39% of all new installs in 2016 – with Natural Gas on 29%, Wind on 26%, and the Other sector on 6%. Coal last posted an addition in 2014, where it was down to just 1% of NCA following a 10% NCA in 2013. Compared to Coal, Natural Gas has shrunk from 47% of NCA in 2013, to the 29% it claimed in 2015 and 2016. Wind contracted to 26% of 2016 NCA, after hitting 39% NCA in 2015.
Away from the utility-scale projects, community solar added a record 200MW in 2016, with Massachusetts and Minnesota leading that sector. Home solar projects were also driven by rate design and net energy metering pressures from local legislators. The report notes that non-residential installation growth (that is, not utility, and not home solar) was higher than residential for the first time since 2011.
For residential solar, which grew some 2,583MW in 2016 (up 19% year-on-year), the report says that California’s market has begun to level out – after leading the industry for many years. The SEIA says that Maryland and New Jersey are both growing strongly thanks to solar achieving grid-parity in their energy markets. The figures say that a record 22 states added more than 100MW of solar in 2016.
“What these numbers tell you is that the solar industry is a force to be reckoned with,” said the SEIA’s CEO, Abigail Ross Hopper. “Solar’s economically winning hand is generating strong growth across all market segments nationwide, leading to more than 260,000 Americans now employed in solar.”