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Energy and Resources U.S. solar installation outlook brightens on falling costs

The U.S. solar energy industry lifted its installation outlook for this year and beyond thanks to robust demand for large-scale projects by utilities buying the clean energy source for its low cost, according to a report published on Tuesday.

In 2019, installations are expected to be up 25 per cent from 2018 to 13.3 gigawatts, the report from the Solar Energy Industries Association and Wood Mackenzie said. The groups’ previous forecast called for 14 per cent growth this year.

The change is primarily due to late project announcements in Texas, the report said.

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The rosy outlook marks an about-face from 2018, when installations fell 2 per cent after U.S. President Donald Trump slapped 30 per cent tariffs on overseas-made solar panels.

Since then, global panel prices have fallen dramatically due to an oversupply of panels in top producer China, which cut incentives for installations there. Between the first quarter of 2018 and the first quarter of 2019, monocrystalline module prices fell 30 per cent, according to the report, effectively cancelling out the U.S. tariffs.

Looking ahead, the industry lifted its five-year outlook by 5.1 GW, or about 9 per cent, mostly due to new procurement by utilities in Florida including Nextera Energy Inc’s FPL and Duke Energy Corp.

Utilities are seeking to capture generous tax credits for installations that will begin to step down next year. The credit currently stands at 30 per cent but will gradually drop to a permanent 10 per cent in 2022.

Florida is expected to be the top state for utility-scale solar over the next six years, the report said, marking a major shift away from the industry’s historical centre of power, California.

Wood Mackenzie senior analyst Austin Perea said the shift was notable because Florida lacks the strong policy support for renewable energy that exists in California. Utilities in Florida, therefore, are buying solar because it is cheap compared with fossil fuel alternatives like natural gas and coal.

“We are seeing utility-scale solar becoming much, much more cost competitive,” Perea said in an interview.

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In the first quarter of 2019, the United States installed 2.7 GW of solar, up 10 per cent from a year ago. Solar accounted for more than half of all new energy capacity additions during the quarter, the report said.

The residential solar market rose 5 per cent during the quarter to 600 megawatts. Utility-scale installations were 1.6 GW, while non-residential systems reached 438 MW.

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