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US solar installations fall, costs rise in third quarter: report

US solar installations third quarter dropped 51% from the same quarter a year ago, in large part because of a slowdown in installations in California, said a report the Solar Energy Industries Association and GTM Research released Thursday.

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The report also said all solar market segments saw price increases in Q3 that stemmed from increases in module costs. Those increases, the report said, were "due to a global shortage of Tier 1 module supply," as well as concerns over the Section 201 tariff case that President Donald Trump must decide on by January 26.

After many quarters in which prices have declined, system pricing in Q3 rose between 1.3% and 2.1% in the residential, non-residential and the fixed-tilt and single-axis utility-scale markets, the report said.

"This is the first time this has happened since this report series' inception in 2010," the authors of the report said.



Fearing a ruling from the Trump Administration on the Section 201 case brought to the International Trade Commission by co-petitioners Sunniva and Solar World that might impose tariffs on imports of certain types of solar modules and cells, US engineering, procurement and construction firms who build large utility-scale facilities, as well as rooftop installers, have begun buying modules for 2018 projects, the report said.

"Global Tier 1 module capacity available to serve the US market is limited and has already been fully allocated for 2017," the report said. Tier 1 is the top of a ranking system of solar panel manufacturers and their products.

According to the report, the US solar market saw 2,031 MW of installations in Q3, with just over half coming from the utility-scale segment.

The report said that utility-scale PV in 2017 "has been softened by projects that pushed out their completion dates from 2016 as a result of the 30% federal Investment Tax Credit extension."

Utility-scale projects that have "spilled over" into this year represent about 50% of the 2017 forecast.

The report said there could be as much as 4,000 MW of newly installed utility-scale solar in Q4.

The SEIA/GTM report said it expects solar installations to fall year on year in 2018 before rebounding in 2019, "in large part due to trends in utility PV procurement."

Utility-scale PV "recovery" is expected to be driven by procurement of projects outside of renewable portfolio standards programs. More than 75% of the current PROJECT pipeline comes from "voluntary procurement, PURPA, off-site corporate procurement, and California-based community choice aggregators," said Thursday's report.

There was 517 MW of installed residential PV in Q3, or roughly 25% of total installed solar. Q3 residential installations were 10% below Q2 2017 installations, and 16% below the year-ago level.

Behind the decline is "continued weakness in established state markets," mainly California, but also in the Northeast, the report said.

The authors lay part of the blame for the residential decline on maturing markets, but also on installation companies who have been "scaling back operations to more sustainable levels in an effort to prioritize profitability over growth."

--Jeffrey Ryser, jeffrey.ryser@spglobal.com
--Edited by Valarie Jackson, valarie.jackson@spglobal.com