U.S. Solar Market Insight: COVID cuts more than 3 GW from solar’s five-year forecast

U.S. Solar Market Insight: COVID cuts more than 3 GW from solar’s five-year forecast

covid solar installations

The U.S. solar market installed 3.6 gigawatts (GW) of new solar photovoltaic (PV) capacity in Q1 2020, according to the U.S. Solar Market Insight Q2 2020 report from the Solar Energy Industries Association (SEIA) and Wood Mackenzie — which makes it the best first quarter total in history by nearly a gigawatt.

Let’s say it another way: In Q1 2020, solar accounted for nearly 40% of all new electricity generating capacity added in the United States. That’s all awesome news, but, as you know, the coronavirus has rerouted the victory parade in numerous ways:

  • Forecasts show that in 2020 the residential and non-residential markets will see 25% and 38% decreases in year-over-year installation volumes, respectively.
  • Distributed markets will see a combined 32% less solar installed in 2020 than forecast before the pandemic.
  • Wood Mackenzie forecasts a 9% reduction (1.7 GW) to the previous market outlook for 2020, where nearly 20 GW of solar was forecast for 2020.

“The solar industry has certainly been impacted by the pandemic, resulting in uncertainty for businesses and 72,000 Americans out of a job,” said Abigail Ross Hopper, SEIA’s president and CEO, in reference to recent analysis from SEIA.

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Utility sector still booming, but future uncertain

Overall, however, Wood Mackenzie forecasts 33% growth in 2020, owing entirely to the strong performance of the utility-scale segment, which is expected to account for more than 14 GW of new installations this year.

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Record utility-scale procurement totals in 2019 and Q1 2020 positioned the segment for a record year, even as large-scale projects face some construction delays and challenges in financing and developing early-stage projects.

“While the utility segment shows promise with sustained levels of procurement so far, lower energy demand due to productivity loss and wholesale electricity market price drops will add to the uncertainty,” said Ravi Manghani, Head of Solar at Wood Mackenzie. “All in all, the pandemic and the ensuing economic slowdown will weigh heavily on the solar industry in the coming months if the economy is slow to recover and financing dries up.”

Beyond 2020 …

All market segments face considerable uncertainty caused by the pandemic, resulting in a downward revision of 3.6 GW to the 2020-2025 forecasts relative to last quarter.

Growth will be contingent on economies reopening, recovery of consumer and business demand, financial market stability and a resumption of growth in electricity demand.

— Solar Builder magazine

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