In 2017, the U.S. solar market installed 10.6 gigawatts of solar photovoltaic (PV) capacity. Despite installing 30 percent less solar than during a record-breaking 2016, the market still exceeded 2015 levels by 40 percent. In line with previous years, 59 percent of the installed capacity came from the utility PV segment, while distributed solar accounted for 41 percent of installations.

2017 bucked many historical trends in what proved to be a transitional year for the solar market. All segments experienced role reversal, as residential and utility PV — long the growth segments of the solar market — both saw installations fall on an annual basis for the first time since 2010, marking a “reset” year for both segments. Meanwhile, the long-beleaguered nonresidential PV segment was the only market to experience growth in 2017.

For residential PV, the downturn in 2017 stems from segment-wide customer acquisition challenges that are constraining growth across most major state markets. Amidst other variables — such as net energy metering reform, loss of state incentives, and competitive landscape trends — we are also monitoring the relationship between increasing customer penetration and low installation growth, as the pool of attractive early-adopter customers grows increasingly thin in certain markets. While the relationship between market penetration and growth does not fully explain the market downturn, GTM Research believes it is increasingly becoming a factor in constraining growth among major state markets.

Meanwhile, 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 in 2016. Uncertainty surrounding the Section 201 tariffs caused many projects to be shelved this year, however, while Public Utility Regulatory Policies Act project cancellation and interconnection delays resulted in many projects spilling over into 2018.

We are forecasting U.S. solar to be essentially flat in 2018. The nonresidential market will fall as a pipeline of projects grandfathered in under more favorable legislation wanes in 2018. Residential PV will see a slight rebound after falling 16 percent in 2017. Though the utility segment is still expected to grow 17 percent in 2019, growth will be relatively flat from 2020 to 2022 as tariffs push out projects that were initially slated for completion in 2020 to 2021.

This article was excerpted from the 2017 U.S. Solar Market Insight report produced by GTM Research and the Solar Energy Industries Association. To download the complete report, go to this link: https://bit.ly/2pGWoGN.