Energize Weekly, March 21, 2018
The Trump administration tariffs on solar cells and modules will cut installations by 13 percent between 2018 and 2022 compared to previous projections, according to GTM Research.
A total of 10.6 gigawatts of photovoltaic (PV) capacity was installed in 2017. Installations in 2018 are expected to be the same. It won’t be until 2023 before the industry regains its 2016 peak, according to the U.S. Solar Market Insight 2017, analysis done by GTM for the Solar Energy Industries Association.
In January, President Donald Trump approved, under Section 201 of the U.S. trade laws, a four-year tariff on photovoltaic cells and modules, starting at 30 percent and stepping down 5 percent a year to 15 percent in 2021. The first 2.5 gigawatts (GW) of imports each year will be exempt from the tariff.
“Uncertainty surrounding the Section 201 tariffs caused many projects to be shelved this year,” the GTM market report said.
Based on current pricing trends, the 30 percent tariffs result in a roughly 10-cents-a-watt increase in module prices, GTM estimates. But prices were already rising in the fourth quarter of 2017 in anticipation of the tariff, leading to additional projects being shelved.
In the first half of 2017, the price for an average fix-tilt system was 98 cents a watt. The price for the same system is now $1.03 a watt, GTM said. Especially hard hit by the price changes have been utility-scale projects.
Utility-scale solar installations declined about 38 compared to 2016 to 6,234 megawatts (MW).
New installations in the residential PV sector also fell 16 percent compared to 2016 to 2,227 megawatts.
“This contraction was driven by weakness in California and major Northeast markets, which continue to feel the impact of pullback from certain national installers that have shifted away from rapid-expansion strategies,” the report said.
“The year-over-year downturn for utility PV in 2017 was largely expected, due to the massive influx of projects trying to leverage the 30 percent federal Investment Tax Credit (ITC) in 2016,” the report said. The ITC was expected to expire at the end of 2106, but was extended to 2019.
The situation, however, was exacerbated by uncertainty over the tariff and rising PV cell and module prices.
There were bright spots. The non-residential market—solar gardens, commercial and corporate installations—had a record year in 2017 with a 28 percent increase in installations over 2016 to 2,147 MW. It was the fourth straight year of annual growth.
Much of that growth came in California and the Northeast driven by state policies and programs, but Minnesota also made a strong showing.
“Minnesota headlined a banner year for community solar, with more megawatts installed in that state than total U.S. community solar installations in all of 2016,” Austin Perea, GTM Research solar analyst and co-author of the report, said in a statement. “We expect community solar to diversify geographically in 2018, with Maryland and New York to be key growth markets for the sub-segment beginning this year.”
Overall, California and North Carolina remained the two largest solar states after adding the most and second-most capacity in 2017, respectively.
While there was a drop off from the record-setting pace of 2016, the 10.6 GW in 2017 were still 40 percent higher than the 2015 installations.
GTM projects that total installed PV capacity will more than double over the next five years, and by 2023, more than 15 GW of capacity will be installed annually.
