Total installed capacity in US will expand at a compound annual growth rate (CAGR) of 19.2%, adding 82.2 GW in new capacity between 2018 and 2022, with more than $25 billion in investment.
EIA’s January 2019 Short-Term Energy Outlook (STEO) forecasts that electricity generation from utility-scale solar generating units will grow by 10 percent in 2019 and by 17 percent in 2020.
- Definition / Scope
- Market Overview
- Market Risks
- Top Market Opportunities
- Market Trends
- Technology Trends
- Pricing Trends
- Regulatory Trends
- Market Size and Forecast
- Market Outlook
- Technology Roadmap
- Competitive Landscape
- Competitive Factors
- Key Market Players
- Strategic Conclusion
Definition / Scope
Solar energy is the radiant light and heat from the sun that has been harnessed by humans since ancient times using a range of ever-evolving technologies.
Solar radiation along with secondary solar resources account for most of the available renewable energy on earth.The total amount of solar energy incident on Earth is vastly in excess of the world’s current and anticipated energy requirements.
If suitably harnessed, this highly diffused source has the potential to satisfy all future energy needs. In the 21st century solar energy is expected to become increasingly attractive as a renewable energy source because of its inexhaustible supply and its nonpolluting character, in stark contrast to the finite fossil fuels coal, petroleum, and natural gas.
The U.S. installed 1.7 gigawatts (GW) of solar PV capacity in Q3 2018 to reach 60 gigawatts (GW) of total installed capacity, enough to power 11.3 million US homes, according to the Solar Energy Industries Association (SEIA).
While these numbers do represent a 15% year-over-year decrease and a 20% quarter-over-quarter decrease, many positive developments were moving solar in a positive direction.
Solar employment had overtaken oil and gas as well as coal employment in the United States. The industry directly or indirectly employs about 370,000 people in the United States, of which 260,000 are full- or part-time. Solar photovoltaic installers make up about half of this workforce.
US states drove many new policy initiatives in 2018 that benefited solar. 23 green tariffs in 17 states have been proposed or approved to facilitate US corporate renewable procurement.
California holds the largest market share in the U.S. solar market. However, there is continuous expansion in markets like Florida, Texas, Utah, and Minnesota. Falling prices are attracting new entrants in the solar energy industry. These players are expected to acquire a larger market share in future.
- Solar projects depend on favourable weather conditions for their power outputs and therefore their revenues. The variability of the weather means that the volume of power is subject to variation over short and long timescales. The effect of long-term variability means that revenues of projects can vary year to year by about 5% for solar projects, depending on the region.
- As renewable projects are capital-intensive, damage to assets can have a significant impact on overall costs. The construction phase is the most risky period of a project from this point of view: solar panels may be cracked when being fixed into place.
- Variable renewables are at a disadvantage in the electricity markets as they cannot control when they generate power, unlike fossil fuel driven plants. An increase in the capacity of renewables on the grid will increase the day-ahead uncertainty of supply. Depending on the existing generators and grid infrastructure, and the timescales being considered, the power price may become more or less volatile as a result of adding renewables to the grid.
Top Market Opportunities
- The development of photovoltaic (PV) storage systems is essential to increase the ability of PV systems to replace the existing conventional sources. With the rise in demand for PV installations, the adoption of storage grid is projected to increase, which fuels the demand for lithium ion-powered battery for solar energy storage and increase the solar energy market growth.
- The amorphous silicon cells segment is expected to witness maximum growth owing to increase in installations and utilization in solar panels. Moreover, the demand for copper indium gallium selenide (CIGS) is expected to increase during the forecast period, owing to rise in cost-effective solar panels. Furthermore, low-cost manufacturing and increase in efficiency of solar modules are projected to boost the demand for cadmium telluride during the forecast period in the solar energy industry.
- The Solar Investment Tax Credit (ITC) has provided industry stability and growth since its initial passage in 2006. In the last decade, solar has experienced an average annual growth rate of 50%. Installations surged in 2016 ahead of potential expiration of the ITC, but an extension in late 2015 has created federal policy stability through 2021.
- Over 242,000 Americans work in solar – more than double the number in 2012 – at more than 10,000 companies in every U.S. state. In 2018, the solar industry generated a $17 billion investment in the American economy.
- The cost to install solar has dropped by more than 70% over the last decade, leading the industry to expand into new markets and deploy thousands of systems nationwide. An average-sized residential system has dropped from a pre-incentive price of $40,000 in 2010 to roughly $18,000 today, while recent utility-scale prices range from $28/MWh – $45/MWh, competitive with all other forms of generation.
- Solar has ranked first or second in new electric capacity additions in each of the last 6 years. Solar’s increasing competitiveness against other technologies has allowed it to quickly increase its share of total U.S. electrical generation – from just 0.1% in 2010 to more than 2% today.
- Module prices fell steadily until 2017 when the Section 201 Solar Tariff case was announced. The uncertainty surrounding the decision caused module prices to rise in late 2017, with the largest impact on utility-scale systems, where modules constitute 40 – 50% of total system costs. Despite imposition of the 30% tariff in February 2018, module prices have begun falling again due to renewed market certainty in the wake of the lower-than-expected tariff announcement and global module oversupply caused by steep reductions in Chinese demand.
- The Trump administration’s solar tariff will be more challenging for utility-scale solar projects than for residential, because the modules account for a larger share of the total cost of large projects. A 30-percent tariff will likely increase the costs of solar installations by about 11 cents per watt, or roughly 10 percent, which could reduce the amount of solar installed over the next 4 years by five to eight gigawatts of capacity, mostly at the utility scale.
- The adoption of PV system technology is marginally affected by factors such as reliability, overall production, and competitiveness. In addition, overall climatic conditions and geographical latitudes restrain the solar energy market growth, especially in snowfall- and rainfall-prone regions
- The biggest challenge for U.S. solar companies – particularly installers – is uncertainty. Congress recently tried unsuccessfully to cancel tax credits for installing new solar capacity, and the tax cut bill that was enacted in December includes some changes that may affect credits for investing in solar.
- One of those factors is the high cost and limited efficiency of alternative PV modules, which makes an initial capital investment and the overall expense for these units higher than for crystalline silicon. Lower efficiency is another hurdle, with larger module requirements needed to meet the same capacity found in plants using crystalline silicon technology. Overall, PV systems are less favorable when compared to c-Si technology, especially in utility-scale plants.
- In some major markets, such as California, bringing large amounts of solar generation online is depressing wholesale electricity market prices, which erodes the value of the electricity that these systems produce. This makes projects gradually less economic to install.
- As solar energy installations began to grow across the globe, manufacturers rushed to produce the panels and materials needed to generate the renewable electricity. Even with record growth in the industry, the large number of companies that jumped into the market created an oversupply of solar panels. Because the supply is so much higher than the demand, many of these companies have gone out of business.
- Crystalline silicon solar cell technology used in today’s market shows the technological development and the growth in PV market with cost reduction. Simple control, low cost, high efficiency are the major features that people are attracted to and thin film of silicon wafer solar panels are trending as a new technology.
- A photovoltaic (PV) cell is an energy harvesting technology, that converts solar energy into useful electricity through a process called the photovoltaic effect. There are several different types of PV cells which all use semiconductors to interact with incoming photons from the Sun in order to generate an electric current.
The average price per watt for solar panels ranges from $2.67 to $3.43, and solar panel costs for an average-sized installation in the U.S. usually range from $11,214 to $14,406 after solar tax credits.
These prices reflect the cost of a solar energy system both before AND after deducting the federal solar tax credit (known as the ITC), which reduces your solar system cost by 30 percent. Some states, local governments, and utilities also offer rebates and other tax incentives that can further reduce the solar system costs in your quotes from solar installers.
- On January 22nd, 2018, the Trump Administration levied a 30% tariff on solar imports to the United States. The tariff covers both imported solar cells, a key input to manufacturing solar panels, and solar modules, otherwise known as solar panels. According to a fact sheet released by the U.S. Trade Representative, this tariff will last for four years and will fall by 5% annually, dropping to a 15% tariff in 2021.
- The Energy Policy Act (EPA) addresses energy production in the United States, including: (1) energy efficiency; (2) renewable energy; (3) oil and gas; (4) coal; (5) Tribal energy; (6) nuclear matters and security; (7) vehicles and motor fuels, including ethanol; (8) hydrogen; (9) electricity; (10) energy tax incentives; (11) hydropower and geothermal energy; and (12) climate change technology. For example, the Act provides loan guarantees for entities that develop or use innovative technologies that avoid the by-production of greenhouse gases. Another provision of the Act increases the amount of biofuel that must be mixed with gasoline sold in the United States.
- In March 2013, Lancaster California became the first U.S. city to mandate the inclusion of solar panels on new homes, requiring that “every new housing development must average 1 kilowatt per house.
Market Size and Forecast
Total installed capacity in US will expand at a compound annual growth rate (CAGR) of 19.2%, adding 82.2 GW in new capacity between 2018 and 2022, with more than $25 billion in investment. EIA’s January 2019 Short-Term Energy Outlook (STEO) forecasts that electricity generation from utility-scale solar generating units will grow by 10 percent in 2019 and by 17 percent in 2020.
Solar is the third-largest renewable energy source in the United States power sector, having surpassed biomass in 2017. The U.S. electric power sector plans to add more than 4 GW of new solar capacity in 2019 and almost 6 GW in 2020, a total increase of 32 percent from the operational capacity at the end of 2018. Because of this increase, solar is forecast to contribute slightly more than 2 percent of total utility-scale generation in 2020.
The US Department of Energy’s Energy Information Administration (EIA) projects in its “Short Term Energy Outlook” that solar generation will move from 211,000 MWh per day in 2017 to 260,000 MWh/d in 2018, a 23% increase, and to 290,000 MWh/d in 2019, another 12% increase.
The Solar Energy Industries Association anticipates that total installed US PV capacity is will more than double over the next 5 years, and by 2023, over 14 GW of PV capacity will be installed annually. Developers may hasten to begin solar project construction by year end to qualify for federal tax credits before the US investment tax credit for solar falls from 30% to 26%.
The solar tariff is scheduled to decline 5% annually, eventually falling to 15% in year 4. Solar is projected to continue to grow for the foreseeable future. However, recent events such as the solar trade tariff and tax code changes could dampen that trend. According to one estimate, the tariff alone will reduce solar installations by 11 percent from 2018 through 2022.
The solar power market is global, and solar panels and associated hardware for residential and business applications are essentially the same as those for the largest PV utility scale projects.
Local prices and availability depend on worldwide demand and activity. That means the combination of federal policy, utility responses, and global activity lead many to predict that solar energy installations in 2019 will exceed those in 2018. So, an already busy market will get busier.
Solar skin design
One major barrier for the solar industry is the fact that a high percentage of homeowners consider solar panels to be an unsightly home addition. Luckily, one new venture has a solution.
Sistine Solar, a Boston-based design firm, is making major strides with the concept of aesthetic enhancement that allow solar panels to have a customized look. The MIT startup has created a “solar skin” product that makes it possible for solar panels to match the appearance of a roof without interfering with panel efficiency or production.
Solar powered roads
Last summer paved the way for tests of an exciting new PV technology – solar powered roads. The sidewalks along Route 66, America’s historic interstate highway, were chosen as the testing location for solar-powered pavement tech.
These roadways are heralded for their ability to generate clean energy, but they also include LED bulbs that can light roads at night and have the thermal heating capacity to melt snow during winter weather. The next stop following sidewalk tests is to install these roadways on designated segments of Route 66.
Solar batteries: innovation in solar storage
The concepts of off-grid solar and solar plus storage have gained popularity in U.S. markets, and solar manufacturers have taken notice. The industry-famous Tesla Powerwall, a rechargeable lithium-ion ion battery product launched in 2015, continues to lead the pack with regard to market share and brand recognition for solar batteries.
Tesla offers two storage products, the Powerwall 2.0 for residential use and the Powerpack for commercial use. Solar storage is still a fairly expensive product in 2019, but a surge in demand from solar shoppers is expected to bring significantly more efficient and affordable batteries to market in 2019.
The evolution of the market is chiefly due to the reductions in profile-raising and miscellaneous expenses. A strengthened growth pace is observed in the market due to the productive effect exerted both externally and internally by key driving factors.
The competency of the market is bolstered by the reconditioned nature of the assets existing in the market. The market is anticipated to achieve an unequivocal lead in the market place credited to amended strategies in specific areas. Also, the deals being devised in the market are presumed to inspire the expansion of the market in the approaching years.
The absorbed charges in the market are easily dealt with, freeing up more resources for the progress in the market. The firms operating in the market are insistently dealing with the deterrents to growth and are making approaches that are likely to influence a beneficial consequence with regards to the market’s advancement.
Price is the primary competing factor, however initial CAPEX (Capital expenditure) does not allow a lot of room for price wars in this industry. Besides price, technological knowhow and after sales service are strong factors for differentiation.
Key Market Players
Cypress Creek Renewables
- Pre-Construction: 560
- Under Construction: 16
- Operating: 292
- Total Solar Capacity (MW): 10,971.23
Cypress Creek Renewables successfully develops, builds and operates solar facilities across the United States. Their business model is primarily focused on utility-scale ground mount projects from 2-10MW AC in capacity. Cypress brings extensive development experience and very aggressive financing to create new opportunities in emerging solar markets.
First Solar Inc.
- Pre-Construction: 64
- Under Construction: 9
- Operating: 522
- Total Solar Capacity (MW): 7,852.88
First Solar is a leading global provider of comprehensive photovoltaic (“PV”) solar systems which use its advanced module and system technology. The Company’s integrated power plant solutions deliver an economically attractive alternative to fossil-fuel electricity generation today.
From raw material sourcing through end-of-life module recycling, First Solar’s renewable energy systems protect and enhance the environment. By integrating technologies, services, and expertise across the entire solar value chain, First Solar delivers bankable PV energy solutions that enable a world powered by reliable and affordable solar electricity.
NextEra Energy, Inc.
- Pre-Construction: 56
- Under Construction: 4
- Operating: 91
- Total Solar Capacity (MW): 7,462.96
NextEra Energy, Inc. (NYSE: NEE) is a leading clean energy company with consolidated revenues of approximately $17.0 billion, approximately 44,900 megawatts of generating capacity, which includes megawatts associated with noncontrolling interests related to NextEra Energy Partners, LP (NYSE: NEP), and approximately 13,800 employees in 27 states and Canada as of year-end 2014.
Headquartered in Juno Beach, Fla., NextEra Energy’s principal subsidiaries are Florida Power & Light Company, which serves approximately 4.7 million customer accounts in Florida and is one of the largest rate-regulated electric utilities in the United States, and NextEra Energy Resources, LLC, which, together with its affiliated entities, is the world’s largest generator of renewable energy from the wind and sun.
Through its subsidiaries, NextEra Energy generates clean, emissions-free electricity from eight commercial nuclear power units in Florida, New Hampshire, Iowa, and Wisconsin.
- Pre-Construction: 124
- Under Construction: 1
- Operating: 65
- Total Solar Capacity (MW): 6,673.84
Ecoplexus develops, owns and operates solar PV projects for the utility, and industrial markets in the U.S., Japan, Mexico and Turkey. The Company has developed and financed over fifty projects to date. Customers include major utilities such as PG&E, Duke, Progress, Xcel Energy, PSEG, and Georgia Power and approximately fifteen municipalities in the US.
The Company also provides operation and maintenance (O&M) services for investor/owners, including Fortune 500 companies, for approximately 50 projects.
- Pre-Construction: 23
- Under Construction: 1
- Operating: 12
- Total Solar Capacity (MW): 5,743.66
8minutenergy develops, finances, engineers, constructs, holds, operates and maintains solar projects. Their projects target all regions of the United States, including California – the largest renewable energy market in the U.S. – where demand for our power is considerable. Every 8minutenergy solar PV power project generates local construction and operational jobs, as well as ancillary business and service jobs.
8minutenergy’s unique, proprietary process accelerates permitting and development by selecting land-sites and technologies that mitigate risk and minimize approval obstacles. Power grid analysis and detailed land assessments are employed to choose optimal power plant sites that are then validated for economic viability.
As a result of this, and the extensive experience of our veteran team, our development timeframe is typically much faster than those of other solar developers. They prefer to build its solar projects on “disturbed” land (for instance, low-value farmland) for lower environmental impact and faster permitting.
Access to the distribution or transmission grid is key, and 8minutenergy has developed specific processes to make sure that our projects can interconnect fast and with little investment.
sPower (Sustainable Power Group)
- Pre-Construction: 36
- Under Construction: 1
- Operating: 114
- Total Solar Capacity (MW): 5,316.54
sPower is the largest private owner of operating solar assets in the United States. sPower is owned by a joint venture partnership between The AES Corporation (NYSE: AES), a worldwide energy company headquartered in Arlington, Virginia, and the Alberta Investment Management Corporation, one of Canada’s largest and most diversified institutional investment fund managers.
Headquartered in Salt Lake City, UT with offices in San Francisco, CA and New York City, NY, sPower owns and/or operates more than 130 utility and distributed electrical generation systems across the US.
- Pre-Construction: 37
- Under Construction: 11
- Operating: 439
- Total Solar Capacity (MW): 3,842.02
SunPower (NASDAQ: SPWR) provides a diverse group of customers with complete solar solutions and services. Residential customers, businesses, governments, schools, and utilities around the globe rely on SunPower’s more than 30 years of proven experience.
From the first flip of the switch, SunPower delivers maximum value and superb performance throughout the long life of every solar system. Headquartered in Silicon Valley, SunPower has dedicated, customer-focused employees in Africa, Asia, Australia, Europe, and North and South America.
- Pre-Construction: 22
- Under Construction: 2
- Operating: 70
- Total Solar Capacity (MW): 3,569.73
Recurrent Energy is a leading utility-scale solar project developer, delivering competitive, clean electricity to large energy buyers. Based in the U.S., Recurrent Energy is a wholly owned subsidiary of Canadian Solar, Inc., and functions as Canadian Solar’s U.S. project development arm.
Their development strategy is to build a balanced portfolio of utility-scale solar projects ranging in size from 20- 500 MW to meet the increasing demand from utilities for clean electricity at highly competitive prices. Technology expertise, supply chain capabilities, and access to capital enable Recurrent Energy to deliver solar generating plants at any scale with market-leading cost and efficiency.
- Pre-Construction: 12
- Under Construction: 0
- Operating: 0
- Total Solar Capacity (MW): 3,112.09
Intersect Power is an infrastructure development company bringing utility-scale power to wholesale customers and markets, with the goal of delivering value and viability to both energy buyers and project investors. Currently focused on “greenfield” solar and storage project development, Intersect Power’s functional expertise spans all relevant disciplines including site acquisition, permitting, interconnection, origination, engineering, procurement, construction, and finance.
Hecate Energy LLC
- Pre-Construction: 30
- Under Construction:0
- Operating: 20
- Total Solar Capacity (MW): 2,426.44
Hecate Energy is a leading developer, owner, and operator of power plants in North America and internationally. Hecate Energy brings together business acumen, technical understanding and significant experience in the industry to develop world-class power projects.
The company specializes in solar and wind power, natural gas plants and energy storage, unearthing creative approaches to structuring PPAs and financing power projects both in the United States and abroad. Hecate Energy believes in collaborative, long-term partnerships with the communities, organizations, and countries it serves.
Solar power is an immense source of directly useable energy and ultimately creates other energy resources: biomass, wind, hydropower and wave energy. Most of the Earth’s surface receives sufficient solar energy to permit low-grade heating of water and buildings, although there are large variations with latitude and season.
At low latitudes, simple mirror devices can concentrate solar energy sufficiently for cooking and even for driving steam turbines. The energy of light shifts electrons in some semiconducting materials. This photovoltaic effect is capable of large-scale electricity generation. However, the present low efficiency of solar PV cells demands very large areas to supply electricity demands.
Direct use of solar energy is the only renewable means capable of ultimately supplanting current global energy supply from non-renewable sources, but at the expense of a land area of at least half a million km.