.....Solar companies across the industry are ramping up installations to take advantage of the 30% federal investment tax credit before the end of 2016. After that, the tax perk drops to 10% for commercial and expires entirely for residential.
The Solar Energy Industry Association (SEIA) says that since the federal tax credit was passed in 2006, more than 150,000 American solar jobs have been created and $66 billion has been invested in solar installations nationwide. Last year, 32% of new electric generating capacity in the U.S. came from the solar projects.
As the tax credit heads toward apparent expiration, more than 32 gigawatts of photovoltaic projects, each greater than 5 megawatts in size, are in development or under construction and slated to be operational by the deadline, IHS reported this month.
Canadian Solar is headquartered in Canada but has the bulk of its manufacturing operations in China. It dramatically increased its project pipeline in the U.S. with its February acquisition of Recurrent Energy, said Christine Beadle, IHS senior analyst. "Many of these projects are set to be completed prior to the 2016 deadline, including a 150 MW project for Austin Energy in Texas and several other projects in California."
China Leads Solar Build-Out
More than 40 countries will install at least 100 MW of new solar capacity in 2015, IHS forecasts. It expects global solar PV installations to grow 30% to 57.3 gigawatts this year, with total global PV generation capacity soaring 177% by 2019, to 498 GW.
China alone has a goal of installing 17.8 gigawatts of solar capacity this year, more than the entire global solar PV capacity deployed in 2010. The country appears to be on track, adding more than 5 GW in Q1, an 18% year-over-year increase that brought China's total solar capacity connected to the grid to more than 33 GW, according to the National Energy Administration.
Although solar PV inverter shipments to China increased last year, significant price declines have caused overall revenues within the industry to drop. Despite an 18% increase in PV inverter shipments, to 13.3 GW, to the Chinese market last year, revenue dropped 6%, IHS reported. Price wars among Chinese suppliers have become so fierce that many small suppliers have left the market entirely.
India is targeting new installations of 5 GW per year through 2022. In the U.S., solar PV installations are expected to grow 31% year-over-year to 8.1 GW, according to the SEIA forecast, reaching 40 GW of cumulative capacity by 2016.
At least 89 countries with solar PV end-markets will show growth in solar installations this year, IHS predicts. The top 10 markets are China, Japan, U.S., U.K., Germany, India, South Africa, Italy, Canada and Australia. IHS predicts that Chile will be the next emerging market after South Africa to reach the milestone of 1 GW in installed PV solar capacity.
IHS expects robust solar demand to trigger a four-year record high profit across the industry supply chain this year, with PV module makers' gross profits expected to top $5 billion -- more than double last year.
Although global solar growth was somewhat disappointing last year, 2015 is setting up to be stronger. So said Bernstein Research analyst Michael Parker in a 32-page report, released April 8, that assessed the solar market.
Parker and other Bernstein analysts expect two factors -- energy storage (essentially more efficient battery packs, such as those thatTesla Motors (TSLA) introduced this year) and costs of solar falling 24 cents per kilowatt hour without subsidies -- to make 2018 a "breakthrough year" for the industry.
"We are saying solar, plus energy storage, will be a credible, low-cost alternative in some markets by 2018 without any form of subsidy," Parker said in the report. "Adoption of solar and energy storage technology will accelerate. That scale will help lower costs."
Annual installations of grid-connected, PV solar systems paired with energy storage is expected to grow more than threefold to 775 MW this year, IHS forecasts.
Currently, when factoring in subsidies, a fully-financed, average-size rooftop solar system will reduce energy costs for 93% of single-family households in the 50 largest American cities, a recent Energy Department-based study by North Carolina State University said.
Another take on the plummeting cost of solar components and systems comes from the SEIA, which reports that the cost per watt of silicon PV cells has fallen from $76 in 1977 to 36 cents today. Analysts say that a relatively stable regulatory and policy environment is also helping to drive industry growth.
In the U.S., approximately 20 states have incentives with expirations after 2018 or later. Some of the most beneficial are in Arizona, Hawaii, Maryland, New Mexico and New York, said UBS analyst Julien Dumoulin-Smith.
A key question remains the timeline for implementing carbon regulations -- and to what extent the regulations, late in the decade, will affect the decline in the renewables industry that may follow the end of the federal tax credit in 2016,
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