Utility-Scale Solar Projections Now Exceed Pre-Tariff Forecasts

Projections for utility-scale solar growth from 2020 to 2022 now
exceed forecasts drafted before the Trump administration’s
announcement of Section 201 tariffs,
according to new analysis from energy research and consulting
company Wood Mackenzie Power & Renewables.

Many external factors, like global oversupply, a spike in
corporate procurements and the passage of California’s
SB100
law mandating 100 percent clean energy, have helped shift
the market since the January 2018 tariff announcement. Analysts say
the overall health of the industry has blunted the industry’s
worst-fear impacts, even if the dynamics of the market look
different than they did then.   

“It’s absolutely not apples-to-apples, but to me that’s a
really important message,” said Colin Smith, a senior solar
analyst at Wood Mackenzie Power & Renewables who covers the
utility-scale market. “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.”

Smith said WoodMac’s Q1 2019 utility-scale forecast for 2020
is 8 percent higher than its Q4 2017 forecast, released before the
administration finalized tariffs. It’s 2021 forecast is 19
percent higher than the pre-tariff projection.   

Though the Q4 2017 forecast came after much tariff-related
market uncertainty, which Smith recognizes “was a fairly
disruptive presence,” causing developers to extend timelines or
temporarily shelve projects, he also said “we’ve seen the
market recover incredibly well” since the January tariff
announcement.

Notwithstanding the jumble of tariffs impacting solar systems
— on modules, inverters and aluminum and steel — prices have
also hit historic lows: $0.93 per watt DC for utility fixed-tilt
systems and $1.04 per watt DC for utility single-axis tracking
systems. 

Despite the positive outlook, analysts say the imposition of
tariffs and the months of preceding uncertainty still had
measurable impact in 2018.

  

Total solar installations faltered slightly last year, according
to numbers WoodMac
released this week along with the Solar Energy Industries
Association, with annual capacity additions dipping 2 percent below
2017 totals. Utility-scale solar saw a
contraction
similar to that of the overall market, down 3
percent over 2017. Smith mostly attributes the latter to tariffs,
with interconnection delays for Public Utility Regulatory Policies
Act projects also playing a role.

Overall, the downturn is “fairly insignificant in the context
of market outlook,” according to Austin Perea, a senior solar
analyst at WoodMac and the lead author on its new market report. He
said the slight drop in the market mostly stems from utility-scale
project developers pushing operation dates from 2018 to this year,
which benefits the 2019 forecast. 

With a robust utility-scale pipeline over 23 gigawatts and
expected growth in coming years, analysts say the industry has
proved resilient to the tariff-tied uncertainty that once gripped
it. Analysts also pointed to an “unprecedented” 13.2 gigawatts
of utility-scale power purchase agreements signed last year as
another indication of a bounce-back.

“We’ve just seen a tremendous amount of growth and a
tremendous amount of planning longterm,” said Smith. “Now,
we’re in this position of seeing the market gain a lot of
strength.” 

Despite the 2018 lull, solar also continued its six-year streak
of ranking behind only natural gas in generation capacity added to
the grid. In coming years, WoodMac projects an upward trajectory
that will inch towards the record-breaking installations of 2016.
The company’s utility-scale projections put both 2020 and 2021
above 10 gigawatts.

“We’ve seen the market rebound tremendously,” said Smith.
“The 13.2 gigawatts announced this year I think speaks for
itself.” 

Source: FS – GreenTech Media
Utility-Scale Solar Projections Now Exceed Pre-Tariff Forecasts