Let’s explore solar’s current status and trends in national and international markets. This is important as solar manufacturers and related industries in Washington are actually more dependent on, and subject to, trends developing outside of state boundaries.
Solar is Global, Still Growing, and Commoditizing
It is commonplace for analysts make bold assertions about new disruptive technology markets, and solar is no different.
In 2015, Bloomberg predicted a global investment of $3.7 trillion in rooftop solar over the next 25 years, with a 17-fold increase in installations. The US solar market will follow a similar trajectory in terms of explosive growth, though each state will differ based on current legislative frameworks, incentives, and energy usage.
The EIA’s latest Annual Energy Outlook is much more tepid. EIA forecasts total US energy consumption of 98.95 quad Btu in 2016, with 0.613 quadrillion Btu coming from solar. That’s a mere 0.6% of all energy. Other federal reports are less bullish. In response to the federal Clean Power Plan proposal, EIA created four sensitivity analyses to test various energy generation paths. The most conservative scenario shows renewables will comprise 16% of total energy produced by 2040, with the most progressive estimating 27% of the energy mix in 2040. Compared to the current 10% benchmark, the growth of the renewables sector is estimated to be between 6 and 17%
In May 2014, the Center for Climate and Energy Solutions issued three future electricity market models, changing across each the demand for electricity, GDP growth, price of natural gas, and, most importantly, national climate and energy policies. All scenarios include load defection, wherein consumers reduce their reliance on the traditional utility grid and instead use rooftop solar to meet 0.1% – 0.3% of new energy demand.
Those estimates are likely too conservative. According to a 2015 McKinsey report on renewables, “Solar… is hitting its stride and has grown an average of almost 30 percent a year for the past decade.” Tracking the Sun VIII, a federally-sponsored report issued by the Lawrence Berkeley National Laboratory, reports 28% average YoY market growth in the period 2009 to 2014.
Though source cross-links reduce data validity, the Rocky Mountain Institute (RMI), GTM, and the Solar Energy Industry Association (SEIA) all forecast a very strong market for residential solar. RMI states residential PV installed capacity grew 1350% between 2009 and 2014. Tracking the Sun VIII data, though a sample, show a 384% increase in installed capacity between 2009 and 2014. GTM and SEIA report 70% year-over-year growth, with solar comprising 40% of all the new electricity-generating capacity installed in the U.S. in 2015.
Four states showed thriving solar markets in 2013, and in ss than two years robust PV markets have opened up in six more states. This is excellent news for Washington’s PV manufacturing sector, as traded clusters can leverage national demand more than in-state for new growth opportunities and scaling up.
This is part of a blog series with five sections.