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Global Clean Energy Investment Down, But U.S. Utility Solar Remains Strong

October 19, 2016

By Peter Bronski

Earlier this month, Bloomberg New Energy Finance (BNEF) announced seemingly concerning news: global investment in clean energy for Q3 2016 represented the single worst quarter since Q1 2013, down a staggering 43% over Q3 2015. After 2015’s record of $348.5 billion in global clean energy investment, 2016 is almost certain to track well below that number. Analysts point a collective finger of blame at slowdowns in several international markets, including China, Japan, and Europe.

But does this signal worries for the U.S. clean energy market as well? In a word, no. Especially when it comes to utility-scale solar.

After a record-setting 2015, U.S. solar going even bigger in 2016

By any measure, 2015 was a hard act to follow in the clean energy sector. In addition to record levels of global investment, the U.S. solar market had its best year ever. In its 2015 Utility Solar Market Snapshot—released in July 2016 and based on a survey of more than 350 U.S. utilities—SEPA estimates the U.S. added more than 6 GWac of solar PV to the grid. GTM Research and SEIA in their annual Solar Market Insight report, released in February 2016, put the number at a comparable 7.3 GWdc, bolstered by an exceptionally strong Q4 2015.

For the first time ever in the U.S., new electric generating capacity additions from solar beat those from natural gas. In a similar and more recent tectonic shift across the proverbial pond, during the period April through September 2016 in the UK, actual solar generation—not merely capacity additions—surpassed those of coal for the first time, supplying more GWh of electricity to the UK grid over those two quarters, as shown by an analysis from Carbon Brief.

Can 2016 match or even beat 2015’s lofty numbers here in the U.S.? Despite the recent slump in global clean energy investment that BNEF noted, the U.S. solar market is indeed on track to surpass 2015’s impressive figures.

SEIA’s Solar Market Insight Report for Q3 2016, released in September and covering through Q2, noted that the U.S. solar market brought more than 2 GWdc online in Q2, an impressive 43% increase over the same quarter last year. GTM Research ultimately expects 13.9 GWdc of new solar capacity to come online in 2016, up 85% over 2015’s record-setting installations.

Utility-scale solar maintains status as bedrock of U.S. market

Utility-scale solar continues to dominate these new capacity additions. GTM Research forecasts utility-scale solar will account for more than 70% of 2016’s new solar capacity nationwide. To whit, by these numbers utility-scale solar alone in 2016 will surpass all new solar installed in 2015. According to GTM Research’s Utility PV Market Tracker, as of August some 11 states have 500+ MW of solar PV in development; 20 states have 200+ MW in development.

Multiple factors are driving utility-scale solar’s continued time in the sun, including strengthened state-level renewable portfolio standards in some markets (e.g., CA, OR, NY, HI); PURPA-based projects in other markets; corporate renewable procurement from large-scale, off-site solar projects; and voluntary utility procurement beyond RPS requirements based on solar’s cost-competitiveness against conventional generation sources and its fixed-price hedge value against natural gas price volatility.

Indeed, BNEF in its New Energy Outlook 2016 released in June forecasts that renewable energy will overtake natural gas as the dominant source of electricity generation in the U.S., accounting for 44% of generation vs. natural gas’s 31% by 2040, despite BNEF downwardly revising its price forecasts for natural gas compared to a similar 2015 forecast.

To put a finer and nearer-term solar point on those numbers, one week ago the U.S. Energy Information Administration (EIA) released its latest Short-Term Energy and Winter Fuels Outlook. It notes that utility-scale solar is expected to have the highest growth rate among renewable electricity generation in the U.S., growing from ~10 GW at the end of 2014 to 27 GW in 2017. GTM Research similarly expects the U.S. solar market to surpass 100 cumulative GW by 2021, with an annual install rate of 20 GW or more.

In other words, solar’s outlook in the U.S. continues to look very bright.

Peter Bronski leads marketing and content strategy for Coronal Energy, powered by Panasonic.

Image: copyright Coronal Energy, powered by Panasonic.

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