The United States is likely to install far less solar power than was anticipated in the coming years. This forecast comes as a result of President Donald Trump’s decision to impose tariffs on basic solar equipment, which will inevitably pose challenges to big solar projects.
This tax on solar cell and panel imports was announced earlier this year and is already reducing demand alongside other obstacles the industry faces. These include slow expansion in pivotal state markets and an emphasis on growth over balance sheet discipline.
However, not all is doom and gloom for the solar industry. 2017 was a good year for solar with it being the second year in a row of double-digit gigawatt growth. The sector added 10.6 gigawatts of solar capacity in the form of photovoltaic technology.
Abigail Ross Hopper, SEIA President and CEO, was encouraged to see the growth in solar across the country. In a press release she said “the solar industry delivered impressively last year despite a trade case and market adjustments. Especially encouraging is the increasing geographic diversity in states deploying solar, from the Southeast to the Midwest, that led to a double digit increase in total capacity.”
Despite being double-digits, the increase in 2017 was still 30% less than the astonishing addition of 15 gigawatts in 2016. This record-setting figure came as a result of buyers frantically purchasing equipment before tax credits expired. However, the tax credits were extended in the end.
Over the next five years we can expect to see solar develop in a far less exciting manner.
GTM Research, a clean tech analysis firm, altered its forecast by 13% with regards to solar installation that will take place between 2018-2022. The revision has been put down to various factors, such as changes in federal and state policies, corporate tax reform impacts, and, of course, the consequences of Trump’s solar panel tariffs.
In 2018, GTM expects growth in the United States to stay flat at 10.6 gigawatts. Fortunately, many solar projects already bought their equipment before the tariffs were put in place. This means that the effects won’t be felt too much in 2018.
This is particularly true in the utility-scale segment, which constructs large solar facilities that work like power plants and feed into electric power markets. In fact, GTM predicts that this section of the market will actually expand more this year than it did last year.
However, growth in this segment is not going to last for long as stagnation looks likely between 2020 and 2022 as a result of the tariffs, which will undoubtedly delay or even kill off some projects.
The tariffs could also cap gains in installations for residential homes, despite the surge that has been seen so far in 2018. It is hoped, however, that solar for residential homes could bounce back by the 2020s if companies can sort out their finances and push into new markets.
Similarly, solar for businesses could shrink over the coming years before surging again.
To end on some good news, solar has seen notable growth of installations in the Southeast and Midwest parts of the country where renewables are yet to make much of a footprint. We also saw, in 2017, a rise in community solar. This allows neighbourhoods to benefit from community projects rather than having their own rooftop panels installed.