US Solar Industry Has Largest Second Quarter Ever, But Residential Soon Set To Decline

September 12th, 2017 by Joshua S Hill

The US solar industry had its largest second quarter ever this year, adding 2.4 gigawatts worth of new solar capacity, but it was a lackluster quarter for the country’s residential segment, which grew only 1% over the first quarter and declined year-over-year.

The latest quarterly figures investigating the United States’ solar industry were published this Monday by GTM Research and the Solar Energy Industries Association (SEIA), revealing that a total of 2,387 MW (megawatts) of new solar PV capacity was installed during this year’s second quarter. This is slightly up on the 2,044 MW installed during the first quarter of the year, and an 8% year-over-year growth.

However, while overall the solar PV industry looks healthy, digging in deeper shows that the residential solar segment is suffering, growing only 1% over the first quarter — which itself saw a decline of 17% year-over-year — installing only 563 MW, and representing a 17% decline year-over-year.

GTM Research is subsequently predicting that the US residential solar segment will experience its first ever down year, expecting to shrink 3%.

Massive markets such as California and some in the country’s northeast are experiencing declines due to installers such as SolarCity and Vivint Solar pulling back and learning how to achieve the best success in this new and evolving market. California saw a decline in sales due to poor weather and oversaturation, while New York, Maryland, and Massachusetts saw sales fall between 15% and 60%.

“Slowdown in residential solar is largely a function of national installers scaling back operations in major state markets as they prioritize profitability over growth,” explained GTM Research Solar Analyst Austin Perea. “While California was the first major market to exhibit signs of slow-down in Q1, many major Northeast markets began to feel the impact of national installer pull-back in Q2 despite a stable policy environment and strong market fundamentals.”

Overall, companies like Vivint Solar and SolarCity are shifting business models in an effort to better serve a market which has already served the early-adopters. Trying to crack the nut of how to sell to those who have heard the residential solar pitch for years but have not acted on it is the next hurdle for these companies.

“The low-hanging fruit has been picked, and installers need to figure out how to crack that code — how to reduce the cost of customer acquisition and find meaningful growth,” Perea said.

“Residential solar is just not seeing growth rates as high as in the past — which is fine; it’s what happens when an industry matures, but it’s no longer fair to frame it as though rooftop solar is explosive,” Perea added.

Turning away from the residential segment, both the non-residential and utility-scale segments experienced year-over-year growth for the quarter. Specifically, the non-residential segment saw growth of 31% year-over-year with a total of 437 MW installed during the second quarter, driven in large part due to healthy time-of-use rates in California, expiring incentives in Massachusetts, and a record-breaking quarter in New York.

Unsurprisingly, the utility-scale segment accounted for 58% of all PV capacity installed during the second quarter, and it marked the seventh straight quarter in which the US utility-scale segment added more than a gigawatt (GW) of capacity. In total, 1.4 GW worth of utility-scale solar was brought online during the second quarter, and continued “to serve as the bedrock of the US solar market,” according to the report published by GTM and SEIA.

Looking forward, GTM predicts that the overall US solar market will shrink year-over-year in 2017 and 2018, before hopefully rebounding in 2019. Nevertheless, GTM still expects more than 8 GW worth of utility-scale solar to be installed by the end of this year, followed by an estimated 6.5 GW in 2018, before bouncing back in 2019 with upwards of 9 GW.

“This report shows once again that solar is on the rise and will continue to add to its share of electricity generation,” said Abigail Ross Hopper, SEIA’s president and CEO. “Last year, solar companies added jobs 17 times faster than the rest of the economy and increased our GDP by billions of dollars. We are going to continue to fight for policies that allow the industry to continue this phenomenal growth.”











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