solar energy predictions

This post was originally published on PV Solar Report.

It’s never easy to predict the future, and that’s especially true of the volatile solar industry -- one that's often compared to an infant. Like an infant, the industry is still experiencing some growing pains.  

People who work in solar learn to ride the ups and downs, and their tenacity and determination extends to making annual predictions about the industry. At PV Solar Report, we take a look each year at the many predictions about the solar industry and how they stacked up to reality.

The global view

Industry consolidation will continue.

As we noted a year ago, the industry consolidation predicted for 2012 was far from complete that year. IHS predicted that many integrated players would close shop in 2013. An analyst at Photon Consulting believed that by 2013, only 11 companies would be left. Consolidation continued to be the word of the day from others in the industry, as well, though most didn’t provide specific numbers. One analyst at GTM went so far as to predict that by the end of 2013, U.S. cell and panel manufacturing could disappear altogether.

VERDICT:  Predictions were close.

Overall, consolidation is continuing. When it comes to more specific predictions, it’s of course easier to be off the mark. The close of 2013 found more than 11 manufacturers left standing -- some of them even in the U.S. And some argue that there’s more diversification happening than consolidation, as we enter a period in which many different business models are viable.

31 - 38 GW will be installed globally.

NPD Solarbuzz offered a prediction for 2013 on the lower end, at 31 GW worldwide. At the other end of the spectrum was Mercom Capital, with an estimate of 38 GW. IHS expected 35 GW to be installed globally -- down from their previous projection of 51.9 GW. Befitting a bank, Deutsche Bank provided a somewhat conservative estimate of 33.4 GW.

VERDICT: Predictions were spot-on.

As of October, IHS stood by its prediction of 35 GW. Bloomberg New Energy Finance set the number at 36.7 in late November. By December, NPD Solarbuzz was estimating the total for the year at 36 GW. Overall, it looks like actual amounts installed will be well within the predicted range.

The U.S., China, and India will overtake Germany and Italy as top solar markets.

Deutsche Bank expected gains in China, the U.S., and India to offset declines in Germany and Italy. IHS expected Germany to fall to third place in 2013, with China dominating and the U.S. in second place.

VERDICT:  Predictions were close.  

By Q3 it was clear that the U.S. would top Germany in solar installations for the first time in 15 years. Some think the U.S. is set to come in third in 2013, not second, while others put it at the #2 market after the Asia-Pacific region. While Germany is still high in terms of overall capacity, when it comes to 2013 installations, IHS expects China to dominate, followed by Japan. It may not be clear exactly how the top countries stack up till final numbers are in, but for now we can say that China, the U.S., Japan, and Germany are up there. India is making big strides but may have to wait for 2014 for its place near the top of the solar countries list.

Solar trade wars will continue but won’t hurt the industry much in the short term.

IHS seemed confident that solar trade wars would continue in 2013, yielding few winners. However, GTM didn’t expect tariffs on Chinese modules to adversely affect the market, at least not in the U.S. Mercom wasn’t worried about trade wars affecting demand but did caution about the dangers of these disputes.

VERDICT:  Predictions were close.  

While the solar trade wars did continue, SEIA urged negotiation. For 2013, the effects on the market were minimal. In the residential market, panel costs are now a small percentage of overall costs, so there wasn’t much effect there, while some utility-scale developers are feeling the pinch. As we ended 2013 with a strong year for the industry, it’s safe to say that for that year, the trade wars didn't have a big adverse effect.

Solar in the U.S.

4.3 - 4.5 GW  will be installed in the U.S.

Predictions for solar in the U.S. were mostly aligned, with a small spread from the GTM prediction of 4.3 GW to the 4.5 GW figure arrived at by Deutsche Bank’s and Mercom Capital.

VERDICT:  Predictions were close.  

At last count, the U.S. was on track to install 4.2 GW in 2013. While this may have been slightly lower than projections, it was enough to propel the U.S. into the leading solar market outside the APAC region, with over 1 GW being installed each quarter.

Utilities will fight solar in a big way.

I didn’t see this prediction in a lot of places, but it’s worth noting that Barry Cinnamon thought fit to put it in his top 10 list. He expected the “all-out war on DG solar” to intensify, with utilities and others bringing every trick in the book to the battle.

VERDICT: Predictions were spot-on.

2013 saw net metering battles raging around the country. Things really heated up in Arizona, when the state’s largest utility contributed money to two nonprofits that helped manufacture an elaborate controversy around solar. But what was notable about 2013 was the many solar wins against utilities, including in Arizona. We hope 2014 will see more wins -- and even better, more utilities who are forward-thinking enough to support solar.

Storage solutions will transform the industry.

Storage was the word of the day in both predictions and other solar talk throughout the year. According to IHS, 2013 would be the year that energy storage would transform the industry, with a big jump in the number of residential PV systems installed in conjunction with storage.

VERDICT:  Predictions were off.

Storage is poised to become a big player, perhaps in ways no one is yet foreseeing -- it just hasn’t happened yet. The first glimmerings were there. In California, utilities are set to install massive battery banks to store power generated by the sun, and this could set the stage for other states to follow suit. But it’s still hard for individuals to connect their systems to batteries. Storage will continue to be a major topic, and we may see big developments in 2014. But 2013 was a bit too soon for it to transform the industry.

More solar jobs will be added

Without giving specific numbers, most seemed to agree that the recent job growth in solar was set to continue in the U.S.

VERDICT: Predictions were spot-on.

As found in the 2013 Solar Jobs Census, U.S. jobs grew 20% last year, to 142,000. In fact, 1 out of every 142 new jobs in the U.S. was a solar job.

Gas will compete with solar.

It was not uncommon to think that in 2013, gas could compete in a major way with solar, which would still be considered a luxury. With shale gas big in the news, that didn’t seem like a way off prediction to make.

VERDICT: Predictions were mostly off.

Gas production started out seeming like a viable threat to solar, and it was in fact a big source of new power generation in the U.S. last year. However, gas has its limits -- including a quite limited supply, epecially compared to the rays of the sun. An interesting trend has begun to emerge. This was highlighted late in the year when a Minnesota judge ruled that a large solar project would be a better deal than five others proposed, which were mostly for natural gas. That’s right -- in many places, solar is now cheaper than gas.

Solar will surpass wind.

The consensus was that 2013 would mark the first time that more solar PV than wind would be installed in the U.S.

VERDICT: Predictions were spot-on.

Although this may not be a continuing trend, in 2013 more solar was installed than wind throughout the world. The drop-off in wind installations in the U.S. has a lot to do with the production tax credit, but also with continuing increases in solar adoption. The good news for renewables is that overall, both wind and solar are increasing -- and that’s good for all of us.

The financial scene

Module prices will remain low.

IHS expected module prices to remain low and to stabilize by Q2 2013. Jigar Shah and Nat Kreamer both thought that low prices would continue, with slower declines than in previous years. Barry Cinnamon, writing for Renewable Energy World, echoed their sentiments, adding, “By the end of the year, you’ll be able to get two solar modules at the checkout register of your local dollar stores.”

VERDICT:  Predictions were close.  

I haven’t seen solar modules in my local dollar stores, but who’s to say they won’t be there one day? You can buy them now at Lowe’s and Home Depot. Overall, prices did keep dropping in 2013 and are expected to continue going down just a bit into 2014, with some stabilization coming that year.

Soft costs will continue to increase in the U.S.

Soft costs continue to plague the U.S. industry, and most didn’t expect that to improve in 2013. Though serious efforts were being made in this area, the challenge was expected to remain a major one that wouldn’t be easily addressed.

VERDICT: Predictions were spot-on.

Soft costs themselves may not have increased much, but their share of total installation costs rose to 64% last year. That makes soft costs the largest part of installation costs -- and the biggest opportunity for cost reductions. Expect to continue hearing about them this year, with more advances in this area.

Yet more financing options will emerge.

Barry Cinnamon called out in his top 10 predictions for the year that more financing options would become available to homeowners. And both crowdfunding and securitization were expected to open up in 2013.

VERDICT: Predictions were spot-on.

It’s not surprising that these predictions aligned with reality, as this one was really a continuation of last year’s situation. 2013 saw new solar loan options opening up for homeowners. Those who couldn’t put solar on their own roof were able to invest in crowdfunding platforms like those offered by Mosaic and Collective Sun. And SolarCity made big news with their securitization offering, which is set to open up financing in the billions for solar. Given the difficulties of financing solar projects, all these options are welcome news.

The solar stock market will rally.

Some expected 2013 to be a banner year for solar. Others thought the market would flatten but stocks would still fare well.

VERDICT:  Predictions were close.  

In September, stock prices were trending higher, buoyed in part by news of solar’s gains over wind. SolarCity was one of the industry’s success stories, its stock price rising through the year as it announced a variety of innovations and partnerships. Some consider the company a proxy for the industry. However, many are still wary of solar stocks and prefer to invest in solar projects than solar companies.

Surprises

We like to include some surprises in our annual recap, given that the solar industry always experiences some unexpected twists. This year was no exception. Here are a few of my favorites.

Solar made strange -- but welcome -- bedfellows.

From Barry Goldwater, Jr., spearheading the organization Tell Utilities Solar Won’t Be Killed (TUSK) in Arizona to the emergence of the Green Tea Coalition in Georgia, there were many signs last year that solar was finally becoming nonpartisan. After all, solar is increasingly about more than the environment, especially as prices drop. Those who support a free market and having a choice in where they get their energy tend to also support solar.

Solar became middle-class.

Helping solar’s popularity is its increasing availability to the middle-class. Most of the recent growth in solar, it turns out, is in middle-class neighborhoods. This important finding goes a long way to dispelling the myth that solar is just for the rich. That makes it harder for utilities to claim that lower-income people are subsidizing the elite few who can go solar. And it makes solar more appealing to the public.

Women in solar got more attention.

The booth babe debacle at Intersolar brought attention to the place of women in the industry. At this and other solar conferences, people were noting the higher numbers of women participants. The SPI Women in Solar Breakfast couldn’t accommodate all who wanted to attend. And a new focus was brought to women as solar consumers. Look for more from the new group Women4Solar in 2014.

Looking ahead

As Stephen Lacey pointed out, 2013 was “the first time someone could use the words ‘solar’ and ‘mainstream’ in the same sentence and be taken seriously.” While 2013 may have seen the industry at a crossroads, 2014 brings the promise of even more widespread solar adoption.

Will 2014 be the year solar becomes mainstream? Only time will tell -- be sure to check back here in a year for another look at the state of the industry.

Photo Credit: Solar Industry Predictions/shutterstock