Falling residential PV system prices suggest an unprecedented shift in the U.S. solar market and by extension the entire electricity market. How utilities decide to approach solar energy will significantly impact the direction of this shift. Read Shayle Kann’s commentary on the report below.
In the first quarter of this year there were 71.3 megawatts of
residential solar installed in California’s three investor-owned utility
territories, according to our just-released U.S. Solar Market Insight report. Of that total, 13.2 megawatts (18.5 percent) were installed without the support of rebates from the California Solar Initiative (CSI) or any other state-level program.It would be hard to overstate the significance of this, so I’ll
reiterate. In the first three months of this year, around 3,000
residential solar installations were completed in California with no
state incentives. These installations did benefit from a number of
things: full retail net metering (we’ll come back to this), the federal
Investment Tax Credit and accelerated depreciation, and California’s
relatively solar-friendly rate structures. But even so, this is emblematic of a sea change in the solar industry and, even more importantly, the energy industry.Historically, residential solar markets in the U.S. were exclusively
driven, and constrained, by state- and utility-level incentives, often
in rebate form. When a sufficiently large rebate was introduced, the
market reacted, but once rebate funding was depleted, the market
disappeared. This served as a de facto cap on residential solar growth,
and it is why the California statistic is so significant. If state-level
incentives are no longer required, there are 3.5 years of runway before
the ITC expires for the market to adapt, expand and mature. Assuming
nothing else serves as a major barrier — and this is a big “if” given
net metering battles and the ever-increasing need for project finance —
the sky is the limit.