New statistics just released by the United States Energy Information Administration suggest that in the coming year, the booming solar sector will add more new electricity-generating capacity than any other, including natural gas and wind.
EIA reports that planned installations for 2016 include 9.5 gigawatts (GW) of utility-scale solar, followed by 8.0GW of natural gas and 6.8GW of wind turbines.
This suggests solar could truly blow out the competition, because the EIA numbers are only for large or utility-scale solar arrays or farms and do not include fast-growing rooftop solar, which will also surely add several additional gigawatts of capacity in 2016.
This would mean US solar is poised for not just a record year but perhaps a blowout year.
Last year, in contrast, solar set a new record with 7.3GW of total new photovoltaic capacity across residential, commercial, and utility scale installations.
“If actual additions ultimately reflect these plans, 2016 will be the first year in which utility-scale solar additions exceed additions from any other single energy source,” said the EIA.
Justin Baca, vice president for markets and research at the Solar Energy Industries Association, told the Washington Post newspaper that he agrees with EIA’s figures, though the industry group expresses them in direct current (DC) versus alternating current (AC), and so projects a total of 11.8GW of utility-scale solar photovoltaic installations, a number Mr Baca calls “completely consistent” with EIA’s.
On top of that, meanwhile, SEIA expects to see an additional 4.0GW of residential and commercial solar additions, for over 15GW in total, Mr Baca said.
“Solar’s going to be the decisive leader in terms of capacity additions, for 2016,” Mr Baca said.
The reason this is occurring, however, is not a simple reflection of solar’s growing popularity, or its widely agreed upon role in helping to battle climate change.
Rather, it involves the 30 per cent solar investment tax credit, which was extended late last year for five years, with a gradual phase out.
Before its recent extension, the credit was set to phase out at the end of 2016.
Accordingly, to make sure they captured the credit, a large number of installations had been planned to close by the end of this year.
“For the past eight years, the expectation had been that you were going to get your system done this year, otherwise the cost of the system in 2017 was going to be much higher,” Mr Baca said.
“Had the tax credits been extended earlier, people might have relaxed their timelines,” he said.
This logic means that 2017 will not see as many installations as 2016, but Mr Baca thinks the industry will keep growing and that by 2019, will climb back to 2016’s high.
However, given the extension of the credit, it could be that 2016 actually ends a little lower than it would have otherwise, according to Nathan Serota, a solar industry analyst with Bloomberg New Energy Finance (BNEF).
However, he concurs that there should still be a record year.
“It’s going to be big,” Mr Serota said.
“The floor on 2016 will be over 9.0GW” including all types of solar installations, he said.
Mr Serota said the tax credit extension means there could actually be only a slight difference between 2016 and 2017, if enough projects get pushed off til next year.
Granted, solar could still face some headwinds, particularly from the competition offered by extremely low natural gas prices.
In the grand scheme, the tax credits for solar, as well as an extension of the production tax credit for wind, could serve as a kind of “bridge” into an era in which President Barack Obama’s Clean Power Plan is operating, or at least, so the current administration hopes.
A recent report from the National Renewable Energy Laboratory found that due to the tax credit extensions, the US will add 53GW of renewable energy capacity by the year 2020.