If IHS Technology has it right, we can expect amazing national and international solar energy expansion and solar panel growth in 2016. This is an exciting time for the renewable energy sector and the numbers are strong.
At the same time as IHS projects phenomenal solar energy growth in 2016, the report warns about potentially steep declines in 2017. An industry downturn has US providers nervous but the industry has been there and done that before. The focus is clearly on capitalizing on today’s owner-friendly solar energy marketplace.
If the US and China extend their aggressive incentive campaigns, an industry slowdown could be averted. The IHS report, released on November 10, 2016, is clear that sector growth will be fueled by China and the US. Unless change occurs, the incentive programs in both countries will cease in 2016.
In the US, the solar industry is lobbying for extension of the 30% federal investment tax credit, clearly a driving force with solar investors. If no extension is forthcoming, US solar energy owners will only be eligible for a 10% investment tax credit.
In China, the country’s solar energy incentives are set to expire this year but will carry forward through mid-2016. Earlier this year, China announced an unexpectedly large quota for solar panel installations that must be connected by the Summer of 2016.
Parallel pushes by China and the US have created a flurry of solar activity and solar energy installations. Along with the growth spurt, demand for solar panels has spiked and raised questions about whether production of new wafers for the panels can keep pace with demand.
To understand the growth, we must first understand that solar capacity is usually measured in terms of gigawatts. One gigawatt produces the same amount of electricity as a large gas or nuclear plant, a figure that astonishes most consumers.
In the US, 22.7 gigawatts of solar panels are currently operational. That equals nearly the energy output produced by 22 natural gas or nuclear facilities. Yes, solar energy has come a long way in the US!
Solar Explosion in 2016
IHS says that existing incentives in China and in the US will lead to production of 16.82 gigawatts in the first quarter of the 2016. During the second quarter, IHS says another 17.73 gigawatts will be installed. That means that in the US and China a total of 35 gigawatts of solar energy will be added, the equivalent of the output of 35 natural gas facilities.
Big numbers all around! But it is not just the US and China experience tremendous growth when it comes to the popularity of solar energy. The likes of Inspire Energy in Australia have been inundated with companies and homes who are desperate to switch to an environmentally friendly form of energy.
In the first quarter 2015, manufacturers produced 12.76 gigawatts of new solar. An additional 15.14GW were added in the second quarter. Solar energy in the US and in China is on a roll!
However, behind every silver lining, there is a cloud and the solar energy cloud is 2017, when global solar installations are expected to decline by 7.7GW. IHS projects that solar installations, and especially utility scale installations, will decline sharply in 2017. This will occur despite declining prices and seriously advanced technology.
As usual, politics will play a big role in solar industry demand. But, analysts believe that as the cost of solar falls and as the cost of fossil fuel-based energy rises and as solar technologies continue to advance, government may not be needed to drive the demand.
That would be the best of all worlds. When the private sector can boost renewable energy, good things will happen for consumers and the environment.
Go solar today!