U.S. Solar Market Insight: 2015 Year in Review
State and Future of U.S. Solar
April 2016
Cory Honeyman
Senior Analyst
1Honeyman - U.S. Solar Market Insight 2015
Contents
1. U.S. Solar Market to Date: Key Drivers 2
2. Looking Ahead: Rundown by PV Market Segment 10
3. Putting It All Together: 4 Predictions for 2016 22
Honeyman - U.S. Solar Market Insight 2015
U.S. Solar Market to Date: Key Drivers
Just how much has U.S. solar grown over the past several years?
1.
3Honeyman - U.S. Solar Market Insight 2015
U.S. Solar: Growing by impressive strides at the national level
0.3 0.5 0.8 1.2 2.0
3.9
7.3
12.1
18.3
25.6
0
5
10
15
20
25
30
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Cu
mu
lati
ve In
stal
lati
on
s (G
Wd
c)
95% of U.S. solar PV installations have come online this decade
Source: GTM Research/SEIA, U.S. Solar Market Insight
Cumulative U.S. Solar PV Installations by Year: 2006-2015
4Honeyman - U.S. Solar Market Insight 2015
And according to Doctor Emmett Brown from Back to the Future…
2 3 6
10 15
21
34
43
53
65
80
98
-
20
40
60
80
100
120
-
20.0
40.0
60.0
80.0
100.0
120.0
140.0
2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E 2021E
Nu
mb
er of Tim
e Travel Ro
un
dtrip
s Pow
ered B
y Solar
Cu
mu
lati
ve In
stal
led
PV
Cap
acit
y (G
Wd
c)
Total Capacity (GWdc) Time Travel:# of Roundtrips on the Dolorean Powered by Solar
Source: Doctor Emmett Brown and GTM Research
If it takes 1.21 gigawatts to perform time travel…cumulative installed solar PV could currently power MORE THAN 20 trips back and forth into the future.
5Honeyman - U.S. Solar Market Insight 2015
In large part, U.S. PV growth stems from meaningful cost reductions across all segments
$11.30
$3.54
$9.56
$1.56
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
$0
$2
$4
$6
$8
$10
$12
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
An
nu
al PV
Installatio
ns (M
Wd
c)Ave
rage
Inst
alle
d P
rice
($
/Wd
c)
Total U.S. PV Installations Residential PVAvg Installed Cost
Utility Scale PV - Fixed TiltAvg Installed Cost
Source: GTM Research/SEIA, U.S. Solar Market Insight
Average Installed Cost by Segment vs. Total U.S. PV Installations: 2000-2015
6Honeyman - U.S. Solar Market Insight 2015
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
CA
MA HI
NJ
AZ
VT
NM NY
DE
NH SC DC CT
LA MD
CO RI
UT
MN
MO PA
NV FL IL
OR
MI
GA
ME
WI
KY TX IA AR
NC
WY
AL
OH VA
TN SD KS IN MS
NE
MT
AK ID
WV
WA
OK
ND
Year
1 B
ill Im
pac
t fr
om
So
lar
(%)
At Grid Parity: 20 states (including Washington, D.C.)
Leading to more and more states (especially for residential solar) reaching grid parity
Note: Grid parity metrics account for all NEM and rate reforms currently in effect for modeled utilities.
Number of States at Grid Parity in 2016
Source: GTM Research, U.S. Residential Solar Economic Outlook
7Honeyman - U.S. Solar Market Insight 2015
And a 20 GW+ pipeline of utility scale projects increasingly driven by cost competitiveness
$0.00
$25.00
$50.00
$75.00
$100.00
$125.00
$150.00
$175.00
$200.00
PPA
Pri
ce (
$/M
Wh
)
PPA Contract Execution Date
2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: U.S. Utility PV Market Tracker
Utility PV PPA Prices by Contract Execution Date
8Honeyman - U.S. Solar Market Insight 2015
Despite growing levels of cost competitiveness…80%+ of 2015 demand came from the top 10 states in each market segment
45%
41%
14%
California
Rest of Top 10 States
All Other States
45%
52%
3%
California
Rest of Top 10 States
All Other States
Source: GTM Research/SEIA U.S. Solar Market Insight
Distributed PV Installations: California vs. Rest of Top 10 States vs. Rest of U.S.
Source: GTM Research/SEIA U.S. Solar Market Insight
Utility Scale PV Installations: California vs. Rest of Top 10 States vs. Rest of U.S.
9Honeyman - U.S. Solar Market Insight 2015
And within each market segment… distinct drivers and risks shape how the market is growing (or struggling) at the state level
0%
10%
20%
30%
40%
50%
60%
70%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2010 2011 2012 2013 2014 2015
Share o
f An
nu
al PV
Installatio
ns (%
)
Uti
lity
PV
Inst
alla
tio
ns
(MW
dc)
Utility PV Installations Share of National PV Installations
0
100
200
300
400
500
600
700
Q12010
Q32010
Q12011
Q32011
Q12012
Q32012
Q12013
Q32013
Q12014
Q32014
Q12015
Q32015
Inst
alla
tio
ns
(MW
dc)
Residential Non-Residential
Source: GTM Research/SEIA, U.S. Solar Market Insight
Utility PV:Market Drivers Evolving Beyond Renewable Portfolio Standards
Source: GTM Research/SEIA, U.S. Solar Market Insight
Residential vs. Non-Residential PV:A Tale of Two Segments Amidst Incentive Volatility
Honeyman - U.S. Solar Market Insight 2015
Looking Ahead: Rundown by PV Market Segment
What are the key questions shaping U.S. solar in both distributed and
utility scale PV?
2.
Honeyman - U.S. Solar Market Insight 2015
Utility Scale Solar Market Outlook
Where and why is demand emerging beyond Renewable Portfolio
Standards?
12Honeyman - U.S. Solar Market Insight 2015
13,882
28,579
20,946
0
5,000
10,000
15,000
20,000
25,000
30,000
Operating Contracted (PPA Signed) Announced (Pre-Contract)
U.S
Uti
lity
Cap
acit
y (M
Wd
c)
In Construction
• Utility PV in 2015: Remains the bedrock driver of U.S solar installation
growth, accounting for 57% of capacity installed in 2015
• At least 50% of 2016 capacity expected to come online will come from non-
RPS market drivers:
◦ With PPA prices for utility PV now ranging between $35/MWh and
$60/MWh, utility PV demand is expanding beyond RPS obligations
◦ PURPA was the largest driver of non-RPS utility PV in 2015 accounting for
22% of all projects brought online last year
◦ And PURPA is one of a handful of emerging market drivers fueling recent
utility PV procurement…
Utility PV: Continued Growth and Diversified Demand Drivers
Utility PV Pipeline: Driven by Non-RPS Drivers
Source: U.S. Utility PV Market Tracker
U.S. Utility PV: Operating Capacity vs. Project Pipeline
13Honeyman - U.S. Solar Market Insight 2015
Utility PV Project Pipeline: Tapping into Emerging Market Drivers
RPS-Driven – Utilities procure due to legislated or regulatory
mandated targets for solar and renewable energy.
Voluntary Procurement – Utilities procure and own PV outside of
any obligations to meet state renewable portfolio standards.
PURPA – The Public Utility Regulatory Policy Act was passed in 1978
to promote energy conservation and renewable energy
development. Under PURPA, utilities are required to purchase
energy and capacity from qualifying facilities (QFs) at their
incremental or avoided costs.
Retail Procurement – An increasing portion of U.S. utility PV is now
being driven by non-utility entities looking to procure renewable
energy to achieve economic savings or to reach voluntary
renewable energy goals.
Source: U.S. Utility PV Market Tracker
U.S. Utility PV Pipeline: RPS vs Non-RPS Driven Pipeline
50%
50%
22%
16% 12%
RPS Driven
Voluntary Procurement
PURPAQualified Facilities
Offsite Corporate
Non RPS Driven
14Honeyman - U.S. Solar Market Insight 2015
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E 2021E
Uti
lity
PV
Inst
alla
tio
ns
(MW
dc)
Utility PV: 11,867 MWdc in 2016; 186% growth over 2015
Near Term: 2016 Utility PV Boom
• With over 20 GW in development and 6 GW of projects in construction,
2016 is on track to have more than 11.8 GW of utility PV come online.
Long term: ITC Extension Impacts and the changing landscape
• As the ceiling on competitive PPA pricing continues to drop, the utility PV
market is expected to be primarily driven by cost competitive market
drivers outside Renewable Portfolio Standards.
• The utility procurement landscape will continue to evolve too, as municipal
utilities, co-ops, and community choice aggregators drive a growing portion
of projects in the 1 MW to 50 MW range.
U.S. Utility PV Market Outlook
Annual Utility PV Installation Forecast: 2010-2021E Near Term (2016) and Long Term (2017-2021) Market Outlook
Source: GTM Research/SEIA, U.S. Solar Market Insight
Honeyman - U.S. Solar Market Insight 2015
Non-Residential Solar Market Outlook
Why has the market struggled to grow over the past couple of years?
And why does GTM Research expect a rebound in 2016?
16Honeyman - U.S. Solar Market Insight 2015
Non-Residential PV in 2015: 1,011 MWdc installed, dropping 4% over 2014
Net Metering Caps Limit Installation Growth and Customer Origination
• Massachusetts: Growth in one of non-residential solar’s primary state
markets has been limited by the waning pipeline of projects under
preexisting NEM caps. The timeline for expanding the utilities’ NEM caps in
MA remains a key policy driver of a strong national level rebound in 2016.
Weak State and Utility Incentive Levels Constrains Growth
• The Northeast remains characterized by oversupplied SREC markets, most
notably in NJ, while markets out West have seen weak demand as utility
incentive programs are eliminated or near incentive funding depletion.
• Silver linings to the 2016 outlook rely on pent-up community solar demand
and emerging market drivers for 1 MW+ development in California…
Non-Residential Solar: State incentive and policy bottlenecks constrain major state markets
National Level Trends for Non-Residential Solar
Source: GTM Research/SEIA, 2015 U.S. Solar Market Insight
Community Solar: Operating Capacity vs. Project Pipeline With 2016/2017 COD
96
512
0
100
200
300
400
500
600
Cumulative Operating Capacity Capacity In Development
Cap
acit
y (M
Wd
c)
17Honeyman - U.S. Solar Market Insight 2015
Non-Residential PV: 1,314 MWdc in 2016; 30% growth over 2015
• Near Term: Demand Fueled by Large Scale (1 MW+) Development
◦ 2016: A rebound is expected via incremental recovery in oversupplied
SREC markets, increased dependence on CA demand via solar-friendly
rates and 1 MW+ development, and pent-up community solar demand.
• Long Term: Saved By the Federal ITC Extension (Especially Small Commercial)
◦ The ITC extension is expected to spur an additional 4 GW of non-
residential solar through 2020, with commercial solar economics more
reliant on the federal ITC than residential given rate design.
◦ Long term growth will increasingly be pegged to the sub 1 MW non-
residential PV market, as third party financing solutions expand into the
small and medium sized commercial customer bases.
U.S. Non-Residential Solar Market Outlook
Source: GTM Research/SEIA, U.S. Solar Market Insight
Annual Non-Residential PV Installation Forecast: 2010-2021E Near Term (2016) and Long Term (2017-2021) Market Outlook
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
No
n-R
esid
enti
al P
V In
stal
lati
on
s (M
Wd
c)
Honeyman - U.S. Solar Market Insight 2015
Residential Solar Market Outlook
What does the future hold for residential solar in an evolving policy
landscape for net metering and rate design?
19Honeyman - U.S. Solar Market Insight 2015
Residential PV in 2015: 2.1 GWdc installed, growing 50%+ on annual basis for
the fourth consecutive year
• Glimpses of demand diversification: The residential solar market is showing
signs of geographic diversification, with the number of 20 MW annual state
markets for residential solar increasing threefold over the past four years.
• But growth is still being primarily driven by the top 10 states, heightening the
impact of NEM reform across a handful of states:
◦ The top 10 states drove 88% of annual installations. But 7 of those states
have considered or approved reforms to net metering and rate design
that roll back rooftop solar savings.
– Most notably, the Nevada PUC recently approved reforms that phase
in increased fixed charges and reduce compensation for solar exports,
all of which is expected to result in a 90%+ reduction in new NV
residential installations in 2016.
Residential Solar: The Pros and Cons of a Consolidated Geographic Demand Landscape
National Level Trends for Residential Solar
Source: GTM Research/SEIA, U.S. Solar Market Insight
Annual Residential PV Installations vs. Number of 20 MW Annual State Markets
2
4 4
8
11
14
0
2
4
6
8
10
12
14
16
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015
Nu
mb
er of States
PV
Inst
alla
tio
ns
(MW
dc)
Annual Residential PV Installations
20 MW+ Annual State Markets
20Honeyman - U.S. Solar Market Insight 2015
How do NEM reforms impact the number of states at grid parity in 2016?
20
0
5
10
15
20
25
Business As Usual NEM $10 Monthly FixedCharge Hike
$50 Monthly FixedCharge Hike
$5/kW demand charge $15/kW demand charge 10% Discount to SolarExport Rate
50% Discount to SolarExport Rate
Nu
mb
er o
f St
ates
at
Gri
d P
arit
y
Number of States at Grid Parity in 2016: Business-as-Usual NEM vs. NEM Reform Scenarios
Source: GTM Research, U.S. Residential Solar Economic Outlook
21Honeyman - U.S. Solar Market Insight 2015
Residential PV: 2,804 MWdc in 2016, 34% growth over 2015
• Near Term: Business-as-Usual Policy Landscape Yields Strong Growth
◦ Over ten states will install at least 40 MWdc in 2016, but growth remains
pegged to California, which is expected to add nearly 1.5 GWdc in 2016
alone.
◦ Largely favorable outcomes in NEM reform debates (i.e. California) will
support growth in most major state markets in 2016.
• Long Term: Demand Diversification (Plus NEM Reform Debates) To
Accelerate via Federal ITC Extension
◦ By 2017, more than half of all states will be at or below grid parity
(residential PV LCOE vs. year 1 electricity savings).
◦ As residential PV penetration in major state markets nears that of
Hawaii’s, residential PV demand is linked to NEM reforms that result in
incremental, rather than stark, rollbacks to rooftop PV compensation.
U.S. Residential Solar Market Outlook
Source: GTM Research/SEIA, U.S. Solar Market Insight
Annual Residential PV Installation Forecast: 2010-2021E Near Term (2016) and Long Term (2017-2021) Market Outlook
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Res
iden
tial
PV
Inst
alla
tio
ns
(MW
dc)
Honeyman - U.S. Solar Market Insight 2015
Putting It All Together: 4 Predictions for 2016
With the recent extension of the federal Investment Tax Credit, state
and utility level drivers and risks move to the forefront of the U.S.
solar market outlook.
3.
23Honeyman - U.S. Solar Market Insight 2015
Four Key Predictions: U.S. Solar in 2016
1.Time-of-use rate structures will become the next hot topic
in debates about the value of rooftop solar
2.Community solar’s breakout year is officially 2016, just one
year later than expected
3.At least 1 GW of utility-scale solar will be procured by
customers that are not utilities
4. A majority of the utility PV pipeline will pack projects into
2016 as if the federal ITC were still scheduled to step down
Four state and utility level trends to watch in 2016 for U.S. solar
0
5,000
10,000
15,000
20,000
25,000
2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E 2021E
Inst
alle
d C
apac
ity
(MW
dc)
Residential PV Non-Residential PV Utility PV
Source: GTM Research/SEIA, U.S. Solar Market Insight
24Honeyman - U.S. Solar Market Insight 2015
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April 2016