U.S. utility-scale solar installations slowed slightly in 2018 as the industry adjusted to President Donald Trump's tariffs on imported solar panel materials.
The U.S. installed 4,361 MW of utility-scale solar capacity in 2018, compared to 4,734 MW in 2017, according to an analysis from S&P Global Market Intelligence. The biggest quarter-over-quarter change was in the fourth quarter, when capacity additions declined 23% to 1,969 MW in 2018, compared to 2,558 MW in the same period in 2017. Total operating capacity now stands at 32,785 MW.
Trump enacted a 30% tariff on solar panels and cells in January 2018 after a pair of U.S. manufacturers filed a complaint with the federal government saying foreign competition and rising imports led to their financial downfall. Industry onlookers have been wary of how the duties, which will be in place for four years and decline to 15% by the fourth year, would affect the domestic solar industry. The U.S. solar industry has cited the tariffs as the prime contributors to job losses in the sector, but an April 2018 S&P Global Ratings report found that the industry would likely survive the tariffs relatively unscathed.
"While we anticipate that this move will slow the growth in the solar market over the four-year tariff term, we expect that the industry will adjust," analysts Corinne Bendersky, Trevor d'Olier-Lees and Gonzalo Cantabrana Fernandez wrote in the report. "Moreover, the industry continues to focus on improving competitiveness by reducing balance-of-system costs, with efforts to improve efficiency, develop higher-wattage modules, and reduce hardware costs."
On fourth-quarter 2018 earnings calls, solar project developers expressed optimism toward maintaining a strong development pipeline as companies look to take advantage of the investment tax credit, or ITC, which subsidizes 30% of the project's capital costs. Projects can qualify for the full value of the ITC if they enter construction before 2020. Under a 2015 deal struck in Congress, the tax incentive has a phase-out schedule through 2022, when the credit drops permanently to 10%.
"Given how quickly panel costs are coming down, balance of plant costs are coming down, solar is a product we're going to be selling in the $25 to $30/MWh range" with the solar ITC and battery storage, then-NextEra Energy Inc. CFO and Executive Vice President of Finance John Ketchum said during the company's fourth-quarter 2018 earnings call Jan. 25. Ketchum has since taken the role of CEO at NextEra Energy Resources LLC, the company’s wholesale power generation arm.
The largest utility-scale solar project completed in the fourth quarter of 2018 was Capital Dynamics Holding AG's Mount Signal Solar Farm III (Imperial Valley Solar 3), a 252-MW project that is part of a group of solar farms along the California-Mexico border. With the first and third phases of the Mount Signal solar cluster online, 80% of the cluster's overall 800-MW capacity is now online, according to Capital Dynamics and developer 8minutenergy Renewables LLC. The output is secured under a 20-year power purchase agreement.
Two utility-scale projects were announced during the fourth quarter of 2018: the Bakeoven Solar Project, a 303-MW facility by Avangrid Renewables LLC in Wasco County, Ore., and the Wang Solar Project, a 120-MW facility developed by U.K.-headquartered developer Belltown Power Ltd. subsidiary Belltown Power Texas in Falls County, Texas.
The U.S. has more than 42,000 MW of solar power capacity in the development pipeline as of March 12, compared to the 33,912 MW of capacity under development in the third quarter of 2018. Of the projects in the pipeline, almost 32,000 MW is in the early development stage. The industry will see the majority of its project pipeline come online through 2021, with installations peaking at 18,900 MW in 2020.
With the third phase of the Mount Signal solar cluster now online, the list of the largest utility-scale solar projects in advanced development or under construction has slightly shifted compared to the third quarter of 2018. The Palen Solar Project (Maverick 4 Solar Project) (Almasol), a 500-MW project from EDF Renewable Energy Inc. that has been under development for more than a decade, moved into advanced development after the U.S. Interior Department's Bureau of Land Management approved the project and EDF Renewables signed power purchase agreements with Edison International's Southern California Edison Co. and Shell Energy North America (US) LP
Another project that moved onto the list is Twiggs County Solar Project (GA Solar 4), a 200-MW facility Origis Energy USA Inc. is developing for Georgia Power Co. Origis acquired the project from First Solar Inc. in October 2018. In addition, Enel Green Power North America Inc. started construction on its 252-MW Roadrunner Solar Plant in Upton, Texas.
S&P Global Market Intelligence considers a solar project to be in advanced development when two of the following five criteria are met: financing is in place, a power purchase agreement is signed, panels are secured, required permits are approved, or a contractor has signed on to the project.