trending Market Intelligence /marketintelligence/en/news-insights/trending/-IWsexkVgdWBUw8kf8FEow2 content esgSubNav
In This List

US solar installations fell in 2018 after Trump set tariffs


US utility commissioners: Who they are and how they impact regulation


Q&A: Datacenters: Energy Hogs or Sustainability Helpers?


Insight Weekly: US stock performance; banks' M&A risk; COVID-19 vaccine makers' earnings


Insight Weekly: LNG exports surge; investors unfazed by inflation; neobanks drive VC funding

US solar installations fell in 2018 after Trump set tariffs

SNL Image

Workers install solar panels on a roof in Arizona.
Source: Associated Press

The U.S. solar market is expected to rebound this year after installations declined in 2018 following President Donald Trump's decision to impose tariffs on equipment imports, according to analysts at Wood Mackenzie Power & Renewables and the trade group Solar Energy Industries Association, or SEIA.

An equipment glut caused by China helped soften the blow from the latest round of U.S. taxes on imported solar cells and panels, but project development still suffered due to the trade uncertainty, the groups said previously.

The U.S. finished 2018 with 10,600 MW of new solar capacity, down 2% from a year earlier, Wood Mackenzie Power & Renewables and SEIA said March 13 in their latest U.S. Solar Market Insight report. The report forecasts a 14% increase in U.S. solar installations this year to more than 12,000 MW.

"The solar industry experienced growing pains in 2018, in large part due to the unnecessary tariffs," SEIA President and CEO Abigail Ross Hopper said in a news release. However, the amount of solar installed in the country is expected to more than double in the next five years, Hopper said, "proving solar's resiliency and its economic strength."

The phase-down of a key federal tax credit is expected to help drive short-term market activity in the U.S. as companies try to take advantage of the incentive before it drops in value to 10% of projects' capital costs in 2022. Trump's solar tariffs are scheduled to decline over the same period, leading Fitch Solutions to maintain a "fairly buoyant forecast for the sector," a spokesperson said.

Higher trade volumes suggest the project development market is picking up. U.S. imports of solar panels rose through the second half of 2018 after bottoming out last April as companies adjusted to tariffs and policy changes in China reduced demand in that country and sent prices tumbling globally. The U.S. imported approximately 1,971 MW of solar panels in the fourth quarter of 2018, up 11% from the prior quarter, according to data from the U.S. Energy Information Administration.

"[We're] ... starting to hear about some really aggressive growth rates for the overall U.S. market," Philip Shen, a managing director and senior research analyst at ROTH Capital Partners LLC, said on a Feb. 26 earnings call hosted by Enphase Energy Inc., which makes electrical equipment for the solar industry. "I think people are going to think about 15% year-over-year growth, but I'm hearing now a 20%, maybe even a 25% or 30%, growth in the U.S. as a market overall."

According to S&P Global Market Intelligence, 11,050 MW of new solar capacity is scheduled to be added to the U.S. grid in 2019. That only includes projects larger than 1 MW that supply at least half of their electricity to the grid.

Last year, solar installations in the residential sector increased by 7% while the non-residential and utility-scale markets saw declines of 8% and 7%, respectively, according to Wood Mackenzie Power & Renewables and SEIA.

"[We] ... expect the U.S. residential market to show continued growth," SunPower Corp. Chairman and CEO Thomas Werner said on a Feb. 13 earnings call, noting a requirement in California that solar power systems be added to all new single-family homes and low-rise apartment buildings starting in 2020.