The What & Why of Solar Trends
It may not be news that U.S. solar energy markets continued to boom last year. In fact, solar installations accounted for 31 percent of all electric power installations in 2013 (Fig 1). It is always interesting, however, to look at public data for insight into why and how – what the trends and challenges are – the drivers of the growing solar markets. After collecting and analyzing available data for the seventh year, as author of IREC’s recently published U.S. Solar Market Trends 2013, the answer is quite clearly a combination of factors. PV prices continued to fall. Lower costs naturally increase consumer demand. Available financing and continued financial incentives from states, the federal government and utilities translate consumer interest into solar investment.
Looking at trends is the best way to predict, or at least anticipate, what’s next. So part of the value of the annual Solar Market Trends Report is simply understanding the changing landscape. Equally important though, it’s an exercise that identifies changing needs, and therefore has become a foundation for IREC and many of its multiple partners to tailor our work to make solar more accessible and affordable to more Americans.
Here are some highlights. Download the full report free of charge here.
First, the numbers.
- Thirty four percent more PV capacity was installed in 2013 than the year before.
- Developers completed three large concentrating solar power (CSP) plants with a combined capacity of nearly 0.8 GWAC at the end of 2013.
- Installed prices for distributed PV installations fell by at least 11 percent in 2013 and have fallen by 44 percent since 2009. The prices of some individual system components, especially modules, have fallen even more.
- More than 4.6 GWDC of PV installations were completed at 155,000 sites in 2013. Growth is largest for small installations (residential) and the largest installations (utility-scale). (Fig 2).
What effect do rebates have on solar markets?
The federal Investment Tax Credit (ITC) of 30 percent of the installed cost is an important foundational incentive for most solar installations. Though their impact on the total market is declining, rebates are still important state policies, especially for smaller installations.
Five years ago, owners of most PV installations received a cash rebate from a state or utility incentive program, and this rebate was arguably the most important element of the financial package. In that era, no state had a significant amount of installations without a rebate program. For the past three years, incentive expenditures have been declining, in part because incentive levels have declined and in part because some states have phased out these programs. Despite lower incentive expenditures, the installed capacity of PV facilities continues to increase. When PV is less expensive, less incentive money is necessary to encourage installations.
Just as the residential sector is making the transition away from markets based on state and utility rebates and incentives, the utility sector now faces a similar transition away from markets based on renewable portfolio standard (RPS) policies.
Top Solar States
The markets for solar technology are concentrated in a few states. In 2013, more than three-quarters of grid-connected PV capacity installed was concentrated in California, Arizona and North Carolina.
Of the Top Ten States for 2013 capacity installations, California, North Carolina and Georgia more than doubled their totals from the prior year. Georgia and Texas joined the Top Ten Installation list for 2013, replacing Nevada and Colorado. Colorado and Nevada both saw a large decrease in utility installations – 66 MWDC and 200 MWDC, respectively. Although Colorado saw a 49 percent increase in distributed capacity installed, it was not enough to offset the large drop in utility installations.
Trends At a Glance
- California was the most important market in 2013. Fifty-seven percent of U.S. capacity installed in 2013 occurred in the Golden State, and the capacity installed was 161 percent greater than what was installed in 2012. In the rest of the country, 18 percent less PV capacity was installed in 2013 than in 2012.
- Residential capacity installed in 2013 grew by 68 percent in the U.S., fueled by the increasing use of leases and third-party ownership of these systems. Over 145,000 residential PV systems were installed during the year.
- Utility sector capacity installed grew by 47 percent. Ten PV installations, each larger than 100 MWDC, were completed in 2013.
- Hawaii had the highest per capita installed capacity of PV systems.
Concentrating Solar Power
- The most CSP capacity ever installed in the United States in a single year was in 2013. Three new CSP solar plants with a total capacity of 766 MWAC were completed, the first completed in the U.S. since 2010. (Fig. 10).
How do these trends position us for the future? The U.S. PV market growth is continuing in 2014, with larger utility sector projects leading the way. Over the near term, the prospect for growth in solar installations is bright in all sectors. The residential sector is growing in a large number of states, and many utility sector projects are under construction or contract and will be completed in 2014 or later. For now, the market continues to be sustained by the federal ITC, state RPSs, and on-going net metering policies. If PV prices continue to fall, consumer demand will offset likely reductions in these supportive policies.
Just published July 15, 2014, U.S. Solar Market Trends 2013, contains 16 graphs and tables that illustrate these trends.