Rarely does the U.S. solar market see a mild year. In an industry characterized by its ups and downs, 2019 did not disappoint.
In the last year, the U.S. market celebrated 2 million installations. Residential solar hit record deployment numbers. Several utilities inked ginormous deals and broke new national records on pricing for large-scale solar installations.
Then, in the final month of the year, Congress handed solar a crushing defeat for the industry’s favorite incentive.
Below, a look back at the biggest trends driving this year’s ride on the solar coaster (sorry, I had to).
Solar, meet storage
Both residential solar and storage logged records in 2019 in the U.S. Headed into 2020, many installers are expecting another boost.
Call it the California effect: Companies around the country attribute at least part of the demand they're seeing to power shutoffs in California.
This fall, amid bankruptcy proceedings and wildfire liability negotiations, Northern California utility Pacific Gas & Electric shut off power for hundreds of thousands of customers (meaning millions of people) in several rounds of power shutoffs. The events, a tactic PG&E hoped would prevent its equipment from sparking more fires, received media coverage across the country. The solar and storage industry seized on the opportunity — Vivint Solar CEO David Bywater called it a “reset” for California sales — boosting their products as a backup power solution.
Customers took note. In California, SunPower reported storage attachment rates higher than 20 percent. Sunrun, the national leader in home solar installations, cited Q3 attachment rates at 60 percent in the Bay Area (its rate is about 30 percent statewide).
Overall, local installers in the state reported demand increases of 3x to 5x in the second half of 2019. And their solar sales proposition will receive significant additional policy support in 2020 when California’s requirement that new homes come with solar goes into effect.
Beyond California, companies in states such as Georgia, Texas and Florida said their customers are increasingly citing resiliency in conversations about solar-plus-storage.
As solar-plus-storage becomes more common, many top-tier installers are experimenting with its possible uses. This year brought several new virtual power plant applications: In February Sunrun bid into an ISO-New England capacity market auction and won. The company went on to sign a smaller capacity contract with Northern California community-choice aggregator East Bay Community Energy and agreed to provide virtual power plant services for Hawaiian Electric.
All of that movement in the distributed solar-plus-storage space came alongside several significant announcements for utility-scale solar and storage. Just four days into 2019, Hawaiian Electric agreed on seven contracts totaling 262 megawatts of solar and 1,048 megawatt-hours of storage. Six hit record-low prices for the state (which has higher electricity and solar prices than the continental U.S.). On the mainland, the Los Angeles Department of Water and Power announced a record-low $40 per megawatt solar-and-storage deal in July.
Deals are getting bigger, too. In Nevada, NV Energy announced a procurement of 1.2 gigawatts of new solar capacity alongside 590 megawatts of energy storage, including a 690-megawatt project and a 571-megawatt installation, which both rank among the largest in the U.S.
Tracking new lows for solar-plus-storage bids and new highs for capacity is a never-ending quest, but 2019 clarified the overall trend that developers will be pairing solar with storage more and more for both residential and utility-scale projects.
Corporate deals
It’s no news that corporate renewables procurement has risen in the ranks of deployment drivers for solar. But that trend became much more varied in 2019, with corporate buyers demonstrating their growing fluency with purchasing solar, in different ways and in different parts of the country.
Texas is the biggest corporate solar market, with 2.1 gigawatts of large-scale utility-scale corporate deals announced in the state this year out of the 4.8 gigawatts total in the U.S.
Notable 2019 deals in the Lone Star State include a 222-megawatt power-purchase agreement between brewer Anheuser-Busch and Recurrent Energy, a 690-megawatt agreement between 7x Energy and unnamed corporate offtakers, and Facebook’s first tax equity investment in renewables, which went to a 379-megawatt project.
Corporate activity this year helped boost Texas to the top of the utility-scale solar ranking, a position long held by California. WoodMac analysts expect the state to remain atop the list through 2024.
Another Texas contract for Cypress Creek Renewables to supply power to hundreds of Starbucks stores also demonstrated the “new evolution of C&I offtake” because of the complexity of purchasing for numerous locations, according to Colin Smith, a senior solar analyst at Wood Mackenzie Power & Renewables.
A small-scale aggregation deal from companies including Bloomberg and Gap indicated the growing variety of arrangements available to corporate buyers. Meanwhile, consistent buyer Google went big, investing in 1.2 gigawatts of solar and wind projects it contracted through an innovative reverse auction process.
With more companies announcing 100 percent renewables targets, it’s not a trend analysts expect to cool down. In August, Bloomberg New Energy Finance noted that 2019 is on track to blow through the previous global record for corporate procurement, set in 2018. In the U.S., the Renewable Energy Buyers Alliance announced that a new record has already been set in 2019: The group logged more than 7 gigawatts of purchases compared to 6.36 gigawatts in 2018.
Through 2024, WoodMac forecasts that corporate procurement will make up to a quarter of utility-scale solar deals in the U.S., with a much higher ceiling for growth.
Policy whiplash
In the last week of lawmaking in 2019, federal legislators dealt a blow to the solar industry when a $1.37 trillion government spending package left out an extension for the Investment Tax Credit. That means that as the calendar rolls into 2020, the credit will step down to 26 percent.
In the lead-up to 2020, the industry vigorously lobbied for an extension. While lawmakers appeared onboard, proposing numerous extension bills in the fall, the White House ultimately nixed the package that contained a possible short-term extension of the credit.
Solar developers may be disappointed, but they are not unprepared for the step-down. Since Q1, companies have laid out safe-harboring strategies and plans to buy up enough modules to last well into 2020 (and even 2021 for some). Midway through the year, utility-scale developers planned to safe-harbor equipment equaling the entirety of their contracted pipelines and some pre-contracted projects, amounting to 31.2 gigawatts.
While there’s inherent risk to that strategy — equipment advances and cost declines could neutralize some of the advantage — those efforts appear validated.
The ITC miss wasn’t the industry’s only policy-related heartache of 2019.
Section 201 tariffs continued to dog the industry, mainly because of lingering uncertainty. In the span of just a few months, the Trump administration granted a tariff exclusion for the budding bifacial market, revoked it and then lost a legal challenge that resulted in its reestablishment for the foreseeable future.
While that exclusion opens up more module capacity to the U.S. — and analysts at Wood Mackenzie Power & Renewables suggest Chinese-based manufacturing will move to Southeast Asia to take advantage — supply remains tight.
Though tariffs are now stepping down, the Solar Energy Industries Association estimates they have already cost 62,000 jobs and 10.5 gigawatts of potential solar capacity, according to analysis released in December. The trade group dropped its findings amid a midterm review of the tariffs and their impact, with the results headed to the president in the new year.
By other accounts, the tariff impact has been relatively slight — particularly compared to the industry’s worst fears.
“Not only has the market recovered and done really well despite the tariffs, it’s actually to the point where we expect more solar — at least on the utility-scale solar side — than we did in the pre-tariff conditions,” WoodMac's Smith told GTM in March.
Costs rose and uncertainty proliferated, but ultimately solar bounced back. The industry argues, of course, that this growth would have been even more pronounced without trade roadblocks (and with more significant policy support).
In 2020, with the ITC phasing down and tariffs still in place, solar will again have a chance to prove it can overcome policy obstacles.
