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US solar installations slow in Q2'18, but pipeline expands

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US solar installations slow in Q2'18, but pipeline expands

New U.S. solar capacity installations slowed to their lowest level since 2015 during the second quarter of 2018, but the industry's project development pipeline expanded during the period.

Domestic utility-scale solar capacity increased by 570 MW during the second quarter, according to the analysis conducted by S&P Global Market Intelligence. That was 53% less than the same period a year ago, and a 47% decline from the first quarter of 2018.

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The largest solar energy facility completed during the quarter was Consolidated Edison Inc.'s Castle Gap Solar Project 1 (SP-TX-12-Phase B). Eight of the 11 largest solar projects completed in the second quarter have nameplate capacities of 30 MW or less.

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However, the solar industry's active development pipeline improved by nearly 4,000 MW from the previous quarter to 28,048 MW. The project pipeline for solar energy facilities scheduled to enter service in 2019 and 2020 improved from 15,476 MW in the first quarter to 18,305 MW.

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The solar industry got welcome clarity from the Internal Revenue Service on June 22, when the agency affirmed that project developers can qualify for the investment tax credit, or ITC, by starting construction within a certain timeframe, rather than actually coming online. The IRS said developers could meet the new requirement by either "starting physical work of a significant nature" or incurring certain capital costs — a guideline that Solar Energy Industries Association said will keep the "solar economic engine moving forward."

The value of the ITC, which has contributed to the solar industry's building boom in recent years, will fall from 30% to 10% of a project's capital costs by 2022. The IRS said projects must be placed into service before 2024 to be eligible for an ITC of more than 10%. Projects that enter construction before 2020 can qualify for a 30% credit; projects that enter construction in 2020 can qualify for a 26% credit; and projects that enter construction in 2021 can qualify for a credit of 22%.

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As of Aug. 2, the largest project under advanced development during the quarter was Techren Solar LLC's Nevada 300 Solar Project (Techren Solar I To IV) (El Dorado Valley Solar). The Nevada 300 Solar Project and the 10 other largest utility-scale projects in advanced development or under construction are all located in three states: Nevada, California and 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.

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As for utility-scale solar projects announced during the second quarter, all but one is located in the Northeastern U.S. The largest solar energy facility announced was EDF Group's Morris Ridge Solar Project, a 100-MW power plant scheduled to come online in 2022 in Livingston, N.Y.

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