The U.S. solar industry has come a long way in a very short timeframe. After decades of slow but steady growth, the last 2.5 years have brought an explosion of new installations in America — with two-thirds of all total distributed solar installed since just 2011. By 2015, installations will likely double.
At only half of a percent of U.S. electricity capacity, it would be hard for anyone to call solar a “mainstream” contributor to the broader energy mix. However, there are a four other factors to consider when looking at the impact of the technology.
1. Primary source of new electricity capacity: yes we have reached a critical mass
In 2012, solar was the fourth-largest source of new capacity in the U.S. This year, it is the second largest, according to the Federal Energy Regulatory Agency.
2. Cost-competitive without fickle state incentives: partially there
There’s no doubt that the solar industry is still dependent on state-level incentive programs, many of which foster boom-bust cycles. More than 80 percent of solar installations are concentrated in five states, not because the fundamentals there are necessarily the best, but because those are the states that have the right incentives in place..
However, there are signs that the market is shifting. In the third quarter of 2013, more than half of all residential solar installations in California were deployed without any assistance from the state’s solar initiative. That number has continually grown every quarter.
3. Solar taken seriously by the electricity industry: yes
This year marked a noticeable change in the way utilities, regulators and analysts are talking about the impact of distributed generation on the grid. This spring, the Edison Electric Institute issued a report warning that utilities could face serious financial losses as more customers invest in solar and efficiency. The report sparked a more serious look at the “utility death spiral” that is already underway in Germany.
4. Solar must be bankable: yes
In order for solar to be mainstream, it must be treated as such by investors. The increased interest in solar on Wall Street is another positive sign.
According to GTM Research, residential solar finance grew from $1.2 billion in 2012 to $2.3 billion this year.
Conclusion
When looking at the whole ecosystem of investment — the participation of Wall Street, the attention paid by utilities and steadily improving project economics — solar may become more influential than previously thought. In Multifamily, 2015 and 2016, will be years to plan on investment in this sector to lower long term costs.