US utility solar project procurement 'exploded' in the first half of 2018 despite Trump administration’s tariffs on imported panels.
A record 8.5 gigawatts (GW) of utility solar projects were procured in the first six months of this year, the most ever procured in that timeframe, according to the latest U.S. Solar Market Insight Report from Wood Mackenzie Power & Renewables and the Solar Energy Industries Association (SEIA). This included 26 projects exceeding 100 megawatts. Looking ahead, the report forecasts an acceleration of solar deployment in the second half of 2018 driven by utility-scale projects.
"Once lower-than-expected module tariffs were announced in January 2018, developers and utilities began announcing new projects," Wood Mackenzie Senior Analyst Colin Smith wrote in the report. "As we move toward 2019, we expect to see continued procurement growth as developers look to secure projects they can bring online before the Investment Tax Credit (ITC) steps down to 10 percent in 2022."
In addition, module prices are at their second lowest mark in history even with the addition of a 30 percent tariff. "Except for residential PV, U.S. system prices are at their lowest levels ever," the report said.
Module prices averaged 42 cents a watt in the second quarter, 2 cents higher than the same period in 2017 but far below the 48 cents a watt they hit late last year as many in the industry had feared about a looming duty on imports.
(FIGURE: U.S. Utility PV Pipeline; Source: Wood Mackenzie Power & Renewables)
As a result of the surge in procurement, the research firm raised its utility-scale solar forecast for 2018 through 2023 by 1.9 GW. That is still 8 percent lower than was projected before the tariffs were announced.
"The data shows us that the tariffs have dampened solar's growth, as previously announced projects were canceled or delayed due to the tariffs," said Abigail Ross Hopper, SEIA's president and CEO. "Yet, this report also reveals that the solar industry is simply too strong to be kept down. Procurement numbers show that solar is poised for substantial growth."
In the residential market, 577 megawatts were installed in the second quarter of the year, essentially flat on both a quarterly and an annual basis. Declines in previous quarters were less a symptom of the tariffs but instead a result of customer acquisition challenges and the scaling back of several large installers. The report points to the leveling out of the market as a sign that customer acquisition challenges may be subsiding. Emerging residential state markets like Florida and Nevada posted large gains in installations and helped the segment rebound.
(FIGURE: U.S. PV Installation Forecast, 2010 – 2023E; Source: Wood Mackenzie Power & Renewables)
The report projects a flat 2018 for the solar market as a whole. Most of the utility solar being procured today will come online in the 2020 timeframe. By then, 28 states in the U.S. are expected to be adding at least 100 megawatts of solar annually, and 25 states will have more than 1 gigawatt of solar PV -- compared with only two states at that capacity in 2010. A gigawatt of solar energy can power about 164,000 homes.
The Solar Energy Industries Association is the national trade association of the U.S. solar energy industry, which now employs more than 260,000 Americans.