In 2016, commercial solar installations achieved an all-time high in the United States, totaling 14.9 gigawatts (GW). Since then, industry experts have predicted a reduction in solar costs, along with increased demand, helping to fuel a projected 20 percent rise in solar installations this year.
Projections For 20 Percent Rise In Solar Installations In 2018
When it comes to solar power, the United States is, quite literally, the king – or queen – of the universe. The country raked in nearly 30 billion USD in solar power revenue in 2017 alone, accounting for over 40 percent of the global total.
And it isn’t just the dollar figure that makes the United States a powerful force in the industry, either. According to a report published in March 2018 by the Solar Energy Association (SEA), there are more than 16 million solar power systems installed in the country and its territories – more than any other country in the world. This figure represents 44 percent of the world’s total installed capacity.
Oddly enough, while the United States leads the way in installed capacity, it lags behind when it comes to generating solar power. In 2016, the country produced 16.9 billion kilowatt-hours (kWh) of electricity from solar energy – amounting to about 6 percent of its total electricity needs – compared to a world-class average of 39.5 kWh per capita. This is a significant gap that industry experts say can be closed with increased investment and government subsidies.
Even more surprising is that the overwhelming majority of this electricity generation comes from commercial solar projects – meaning that, rather than homeowners benefiting from rooftop solar, large companies have largely driven the solar industry in the United States.
How much money did solar energy make in the U.S. in 2017? Let’s take a quick look.
Record-Breaking Revenue Of Nearly 30 Billion USD
Speaking of surprising figures, did you know that in 2017, solar energy (including solar heating, solar hot water, and solar-powered desalination) made more than 30 billion USD in the U.S. alone? This makes it the most lucrative market in the world, even more lucrative than other popular investment destinations such as China and India.
This figure represents an increase of more than 12 billion USD since 2016’s record-breaking figure of 27.9 billion USD. While it’s unclear what is driving this spike in investment – aside from the aforementioned cost reductions and increased demand – the growth of the industry is, at least in part, thanks to a federal investment programme, the Investment Tax Credit (ITC), which provides financial incentives for clean energy projects. Under the current tax law, investments made in solar power projects will be fully credited with an ITC of 30 percent, along with a state tax credit worth an additional 10 percent, for a total of 40 percent federal tax break.
What are the industry’s largest markets? The U.S. is of course the largest market in the world when it comes to solar power, but it is not the only game in town. China, for one, is the world’s second-largest economy and its thirst for clean energy is what has fueled, in part, the growth of the industry there. India, too, has seen a similar trend and, in fact, has one of the fastest-growing solar markets in the world. Canada, too, has been a significant market for solar power, with several installations in the country’s northern territory raking in massive profits for their owners thanks to the abundance of sunshine and low electricity costs – particularly in comparison to other North American markets.
Record-Breaking Revenue To Expected Rise In Demand
It is well known that the largest single purchaser of solar power in the U.S. is the government, particularly the U.S. Department of Defense. With billions worth of energy costs each year, it is no wonder that the DoD has been a significant market for solar power. Just imagine how much money that is, not in comparison to any single company or person but in comparison to the entire country!
Based on current trends, experts have predicted that this market will continue to grow and that, by next year, the United States could become a leading market for energy generated from renewable sources, such as solar power. According to market research company Freedonia Group, the United States could generate as much as 21.2 billion kWh of electricity from solar in 2025 – more than any other country in the world. This is an increase of 50 percent from the 16.9 billion kWh the country generated in 2016.
Forbes has even ranked the United States as the best country for investing in solar power, citing its favourable tax policy, cheap electricity, and abundant sunshine. In fact, some experts predict that the United States will not only continue to lead the world in terms of installed capacity but will surpass France and Germany as the world’s second- and third-largest solar markets, respectively.
Record-Breaking Revenue From Emerging Markets
What if we told you that the emerging markets – particularly China, India, and Brazil – were responsible for the lion’s share of the industry’s growth? That would certainly be a revelation!
In fact, according to Market Reach, a company that provides business consulting and market research for the solar power industry, emerging markets accounted for 70 percent of the industry’s growth between 2016 and 2017 – making it the largest market in the world. In the next five years, the company predicts that the emerging markets will continue to be the market of choice, due to their increased demand for clean energy and falling solar costs.
Emerging markets are, of course, popular destinations for foreign investment and, as was the case with other markets mentioned above, cheap electricity is a major draw. According to Market Reach, solar power in China is now cheaper than coal – the country’s primary source of energy – and it continues to decline in cost.
Why Is The U.S. The Market of Choice?
The United States is undoubtedly the world’s largest and most lucrative market when it comes to solar power. This is due, in part, to an abundance of sunshine (with 329 sunny days a year and around 17 hours of daylight) and the fact that, as mentioned above, the country leads the world in terms of installed capacity. This has, in turn, driven the cost of solar power in the United States to plummet – making this the perfect place for investors to park their cash. In fact, several large companies now have massive operations in the country, specifically in the technology sector.
Not only does the U.S. have a large market, but it also has a sizable pool of potential suppliers. This, in turn, has led to significant cost reductions and increased competition, further reducing electricity prices for consumers. All of this makes the U.S. a lucrative market for solar energy and, as a result, several large projects have come online in recent years, helping to drive down the cost of solar power even more – a trend that is expected to continue in the years to come.
Record-Breaking Revenue From Residential Sustainability
Another market that has seen significant growth in recent years is residential sustainability. In 2017, the market made more than 30 billion USD in the U.S., with sales of rooftop solar systems increasing by 56 percent since 2016. This mirrors an increase globally; worldwide, residential solar installations made more than 220 million USD in 2017, up from 175 million USD in 2016.
Why are people installing solar panels on their rooftops? Aside from the obvious fact that it’s an environmentally conscious and cheap way to generate electricity, the growth of the industry is due, in part, to financial incentives offered by various government schemes, such as the Federal Solar Stimulus Act, which provide homeowners with cash grants to install solar panels. These grants, combined with state-level energy incentives and solar power system purchase loans, make owning a solar panel system relatively affordable.
It should be pointed out that while residential solar power is a significant market, it is not the only one. Commercial solar power makes up an even bigger chunk of the overall sector, with more than 14.9 GW of systems installed worldwide in 2017; this was up from 11.9 GW in 2016 and just 4.7 GW in 2010. The sector is, however, expected to reduce its overall energy consumption due to the rise of energy efficiency measures and new technologies, such as virtual power plants (VPP) and microgrids.
Despite all this potential, the global solar market is still, overall, a bit of a Wild West. According to a recent report from Allied Market Research, the global solar market size will increase from 11.9 billion USD in 2016 to 32.7 billion USD by 2025.