US Surpasses 2 Million Solar Installations as Industry Looks to ‘Dominate’ the 2020s

The number of solar installations in the United States has
officially surpassed 2 million, according to the latest
data
from Wood Mackenzie Power & Renewables and the Solar
Energy Industries Association (SEIA).

The milestone comes just three years after the industry
completed its 1 millionth installation, a feat that took 40 years
to achieve.

Wood Mackenzie analysts expect the U.S. to crack the 3 million
mark in 2021 and 4 million in 2023.

“The rapid growth in the solar industry has completely reshaped
the energy conversation in this country,” said Abigail Ross-Hopper,
president and CEO of trade group SEIA. “This $17 billion industry
is on track to double again in five years, and we believe that the
2020s will be the decade that solar becomes the dominant new form
of energy generation.”

California was central to the market’s early years and remains a
critical leg today, but its importance is diminishing as other
state markets grow up. California accounted for 51 percent of the
first million installations but 43 percent of the second
million.

 

For all its momentum, the U.S. solar market has not been without
its challenges. It reached 2 million installations a year later
than analysts initially predicted, largely due to a drop in
residential installations stemming from the decline of
SolarCity/Tesla.

Residential installations dropped 15 percent between 2016 and
2017, with Tesla’s share showing the most extreme decline during
that period, dropping from 650 megawatts to 352 megawatts.

This was a significant drag on hitting the 2-million-system
mark, since residential systems make up 96 percent of a tally that
counts the smallest rooftop PV array on equal weight with the
biggest solar farm.

Other factors constraining the solar sector at large, such as
the Section 201 tariffs on imported PV equipment, had negligible
impact, analysts said. 

Like California, Tesla’s outsize impact on the residential
market has softened as well, as the company’s
pullback
 from its
solar business
has been met with supply from other
installers.

“The residential sector has become much more diverse in terms
of actual companies involved over the last three years,” said
Michelle Davis, senior solar analyst at Wood Mackenzie Power &
Renewables. “Tesla having a smaller share has meant that in the
last couple quarters, as the market has recovered, other companies
have picked up that market share.” 

Despite its declining portion of the market, Tesla may still be
the one to watch in terms of innovating the customer acquisition
model. Its recent shifts in
sales
strategy to focus more on online purchases and less on
retail stores could demonstrate whether acquiring customers with
super low prices is viable.

So far, frontrunners in the residential space have had to spend
a lot to secure a leading position. Customer acquisition is the
most expensive portion of residential solar, accounting for 23
percent of an average system’s price, WoodMac data shows. 

“Tesla is trying very hard to grow more with really low
prices, by only choosing to focus on low-priced customer
acquisition channels,” said Davis.

“But companies that are doing well right now, such as Vivint
and Sunrun, actually have a very high cost of customer acquisition.
That’s been a relatively successful strategy over the past couple
quarters.” 

In December, Sunrun’s direct business
overtook
Tesla for residential installations. 

Success in acquiring more customers, and at lower costs, will
determine how quickly the industry installs its next million
systems — and at what price. Largely due to the challenges of
customer acquisition cost, Wood Mackenzie forecasts residential
growth at just 3.3 percent in 2019.

The 2 million solar systems currently installed, which represent
more than 70 gigawatts of capacity, provide enough electricity for
around 12 million homes. But that’s just a fraction of U.S.
buildings. 

According to the Census
Bureau
, in July 2017 the U.S. had 137.4 million “housing
units,” a figure that includes apartments as well as single-family
homes, but doesn’t count businesses, manufacturing and other
commercial buildings.

Source: FS – GreenTech Media
US Surpasses 2 Million Solar Installations as Industry Looks to ‘Dominate’ the 2020s