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Nick Cunningham

Nick Cunningham

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

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U.S. Solar Boom Continues: 1MW Installed Every 32 Minutes

Solar plant

Renewable energy policy faces a future of uncertainty with a new fossil fuel-friendly administration set to take office, but the U.S. solar industry just marked its best quarter to date. In the third quarter, the U.S. saw 4,143 megawatts of new solar PV installations, blowing past the previous record set in 2015, according to new data from GTM Research and the Solar Energy Industries Association.

That breaks down to one megawatt installed on average every 32 minutes in the third quarter. “Coming off our largest quarter ever and with an extremely impressive pipeline ahead, it’s safe to say the state of the solar industry here in America is strong,” Tom Kimbis, SEIA’s interim president, said in a statement. “The solar market now enjoys an economically-winning hand that pays off both financially and environmentally, and American taxpayers have noticed.

This year has been exceptionally strong because solar developers expected a key investment tax credit to expire by the end of 2016, so they rushed projects online in order to qualify for the benefit. As such, about 77 percent of third quarter installations came in the form of utility-scale solar projects.

But the fourth quarter promises to be even stronger than the third. GTM Research projects that a tidal wave of 4.8 GW of utility-scale PV will be completed between October and December, which is more than the entire solar industry installed in all of 2015. Analysts expect the strong pace of new utility-scale projects to continue into 2017.

One reason to be concerned about the health of the industry is that residential solar sales are slowing down – the residential segment grew just 2 percent year-on-year and installations are down 10 percent from the second quarter. GTM Research and SEIA attribute the weakness to cyclical problems in the California market, as well as the changes in net metering laws and regulations. In a high-profile case, Nevada scrapped net metering payments, which have severely damaged the economics of solar in the state. The abrupt change in policy caused SolarCity to abandon Nevada altogether.

However, solar has come a long way in just a few years. SEIA notes that the entire U.S. surpassed 10 GW of cumulative solar installed only three years ago. That stands in stark contrast to the expected 14.1 GW to be installed in this year alone. Related: Rex Tillerson: ‘’Russian Spy’’ Or Diplomatic Genius?

While critics would note that rapid growth rates are coming from a low base – which is true – solar is actually posting impressive numbers in another category: the market share of overall new electricity capacity additions. In the first three quarters of 2016, solar accounted for a whopping 39 percent of all new electricity capacity installed, second only to new natural gas plants. After factoring in the expected installations for the current quarter, solar could yet take first place for the year, beating out coal, gas and wind.

Solar is quickly becoming the energy source of choice because the economics have improved so drastically. An interactive map from the University of Texas at Austin Energy Institute depicts the competing technologies around the country, demonstrating how geographical differences go a long way in determining what developers decide to build when looking at new electricity capacity.

Looking at the map, wind power clearly wins in the heart of the country, from North Dakota down to Texas, as prairie winds and open spaces allow wind developers to beat out all competitors. Natural gas still has a grip on large parts of the country, however, including nearly all of the Southeast, parts of the Northeast and Midwest, and parts of the Mountain West and West Coast. But solar already has a foothold in the Southwest, a swath of territory which continues to expand beyond California and Arizona.

(Coal is largely an afterthought at this point, with a shrinking footprint in only isolated parts of Appalachia. And even in places where coal is theoretically the most economical, coal-fired power plants are billion dollar assets that are amortized over decades. Since no utility executive can be confident that coal will be allowed to compete two or three decades from now without significant costs on carbon, it is almost impossible to build a new coal plant these days). Related: The One Chart Showing The Real Cost Of US Energy

Even though new natural gas is still cheaper than solar in most places, solar costs are falling, a trend that is not the case for gas. Natural gas prices are notoriously volatile. And when customers purchase solar power, they sign onto purchase power agreements, which guarantees them a fixed price for years. That certainty, even merely as a hedge, has value, pushing solar ahead of natural gas for many industrial and commercial businesses.

But, as the spike in installations in 2016 clearly shows, solar is still largely influenced by federal policy. The record-breaking year can largely be attributed to the expectation that the 30 percent investment tax credit was set to expire on December 31. Notably, that tax credit was extended through the rest of the decade as part of a 2015 spending bill, a compromise that also saw the U.S. lift its more than 40-year ban on crude oil exports.

As a result, solar will continue to benefit from the tax credit through 2019, after which it will be phased down. SEIA estimates that the extension will lead to an additional 20 GW of new solar installations, employing an additional 420,000 people.

2016 has been the solar industry’s best year to date, and unless the Trump administration goes after that tax credit, solar will continue to expand and will increasingly become the energy source of choice in many parts of the country.

By Nick Cunningham of Oilprice.com

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  • Oilracle on December 14 2016 said:
    --" And when customers purchase solar power, they sign onto purchase power agreements, which guarantees them a fixed price for years"--

    So, how much is for 1KW of the solar energy between 6PM and 6AM?
  • drp on December 14 2016 said:
    I'm just looking to see where this report mentions how Obama has helped Canadians and or US citizens. Obama has shut down the Dakota pipeline which is needed for our country and also our Canadian partners, but Obama, he doesn't care. This is sad. Regards.
  • Joe on December 15 2016 said:
    Good article, but let's keep in mind 1 GW of solar capacity is is not equivalent to 1 GW of gas fired capacity for the simple reason that the solar panels are only useful for one quarter of the 24 hour day. (Still waiting for the economical energy storage systems.) The two are synergetic. For each GW of solar capacity you need a GW of gas fired or some other generating capacity. Still, impressive numbers for solar.
  • EdBCN on December 15 2016 said:
    This sort of success will, in and of itself, make it less likely that the Republican will try to gut the solar tax incentives. Everyone wants to hitch themselves to a winner. Politicians love to talk about job creation. If the jobs are being created in solar, that's where they'll go to talk about it. Success breads success. Cheap electricity and distributed solar are very popular with the GOP base as well. But Trump, as well as a substantial minority of GOP congresspeople have surrounded themselves with pro-fossil fuel people. Dems will be united on one side on this issue and republicans will be fighting each other.

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