Don’t stop us now! After another record breaking year for the industry, hopes are high for solar, despite being faced with challenges and setbacks throughout the country. 7,260 megawatts of solar were in installed in 2015. This total is the highest annual installation record yet and is 16% higher than 2014’s numbers. Let’s take a look at how these numbers break down, with the help of data from the 2015 US Solar Market Insight report, released by Greentech Media and SEIA.
While both utility scale and residential installations saw big gains, the fastest growth was seen in residential. Over 2 gigawatts of rooftop solar were installed in 2015, a 66% jump from 2014. Non-residential, non-utility scale, was flat for the third year in a row, which means that the majority of new solar capacity is happening on opposite ends of the spectrum. New arrays tended to be either relatively small, or pretty large, with not a whole lot in the middle. The report cited “weak incentive funding or constrained development opportunities for 1+ MW projects.” The only exception to the stagnant non-residential market was in California. While California did not offer state incentives for these projects, their growth was attributed to the solar-friendly rate structure in California and many new development opportunities.
On the utility side of things, the report confirmed a finding that SACE has been tracking since 2013: Peak power demands can be met in an economically competitive manner by centralized, utility scale solar. When looking at how to meet capacity needs, utilities often fall back to the old argument that solar is too expensive and not a reasonable or reliable solution. Time and time again, the data is showing that this is not the case and that adding solar to the mix is a strategic move for a variety of reasons. SACE made the recommendation to TVA to utilize an optimal combination of generation options, including solar, when providing comments on the proposal to replace the Allen coal plant in Memphis with a new natural gas plant. In collaboration with our allies in South Carolina, SACE developed similar recommendations in response to Duke’s proposal to build the Lee natural gas plant.
WHERE IS THE NEW SOLAR BEING INSTALLED
The usual solar suspects saw most of the growth, with 87% of the new installations happening in the top 10 solar states (based on new yearly solar capacity added). This trend confirms two things we already know: Good solar policy is key to encouraging increased solar capacity at a state level, and the basic economies of scale still hold true, the more solar that already exists in a local market, the easier/more cost effective it becomes for additional solar to be added in the future.
Here’s how the heart of the Southeast region is holding up in the rankings:
North Carolina – Ranked #2 in the country for installed capacity for the second year in row! North Carolina had a big jump in installation numbers, going from 397 megawatts installed in 2014 to 1,134 megawatts installed in 2015. A lot of this growth is attributed to North Carolina’s Renewable Energy and Energy Efficiency Portfolio Standards, as well as renewable leadership from several large companies such as Apple, Verizon, and IKEA who continue to invest in and lobby for good solar policy in the state.
Georgia – Ranked #8 in the country, moving up into the top 10 from #16 in 2014. Georgia installed 209 megawatts in 2015, an increase from the mere 45 megawatts installed in 2014. Georgia also passed the landmark “Free Market Financing Act” in 2015, making third party power purchasing agreements legal, and leaving only four states in the whole country that specifically disallow them.
Florida – Ranked #16 in the country, up from #20 in 2014. Florida installed 41 megawatts in 2015. This is a jump from the 22 megawatts installed in 2014, but still very far below the Sunshine State’s potential. Florida also saw the utilities spend over $7 million to stall a grassroots solar ballot initiative that would open up the solar market.
Tennessee – Bad year for this state, sliding down to #27 from their #17 ranking of 2014. Only 11 megawatts were installed in 2015, a drastic drop from the 56 megawatts installed in 2014. TVA’s budget caps for solar programs kicked in this year, plus 2014 was a big year for utility scale solar which we expect to also feature in 2016.
South Carolina – Held steady at #35, same as 2014, installing 3 megawatts. We expect to see a big increase in 2016 due to several utility-scale deals, plus implementation of solar programs by utilities in response to Act 236.
Summarizing our expectations for 2016: we expect a big increase in solar activity in most Southeastern states. North Carolina may hold steady in a leadership position, but the other states (except possibly Florida) should move up in the rankings due to installation of expected capacity. Of course, other states may also be stepping up their solar investment so we will have to wait and see.
While some have attributed the massive growth in 2015 to the fear that the ITC would not be renewed, creating a rush to build projects before the tax credit expired, analysts are confident that the extension of the ITC will allow for steady, continued growth over the next several years. The federal decision was made in December of 2015 to extend the ITC through 2021, adding a “commence construction” rule, which would allow benefits to be extended through 2023 as long as the project was commenced by 2021. According to GTM Research, “this extension alone will result in more than 50% net growth in U.S. solar installations from 2016-2020, an additional 24 GWdc over the five-year period.”
Also, in addition to installing a record amount of new capacity, solar surpassed new natural gas capacity in 2015 for the first time ever! It was close (29.4% solar and 29% natural gas – of total new energy capacity installed) but a stark difference from 2014, which saw 32% solar and 41% natural gas. These new numbers bring the total US solar capacity to just over 25 gigawatts; a huge jump from the 2 gigawatts that existed in 2010. GTM research has forecasted an additional 16 gigawatts to be installed by the end of 2016, a 120% increase from 2015, driven mostly on the utility scale side. Stay tuned to see how this all pans out.