Loveless: Solar power's future bright but has a way to go

The largest solar trade show in North America opens in Las Vegas on Monday with another round of good news for the tiny but growing component of the U.S. electric power supply.

Among the announcements planned for the Solar Power International 2016 is a report by GTM Research and the Solar Energy Industries Association that more than 2 gigawatts of solar photovoltaic (PV) systems were installed in the second quarter of 2016 – the 11th straight quarter that solar connections to the grid exceeded 1 gigawatt.

All told, the new solar installations were roughly equal to those recorded in the first quarter of 2016.

“We’re seeing the beginning of an unprecedented wave of growth that will occur throughout the remainder of 2016, specifically within the utility PV segment,” Cory Honeyman, an associate director at GTM Research, said in a statement accompanying the report.

“With more than 10 gigawatts of utility PV currently under construction, the second half of the year and the first half of 2017 are on track to continue breaking records for solar capacity additions.”

Still, solar energy has a very long way to go to match natural gas, coal, nuclear or even wind as a component of overall U.S. electric generation capacity. In 2015, solar energy accounted for less than 1% of that capacity, compared with 33% each for gas and coal, 20% for nuclear and 5% for wind.

But given where it stands today, solar is gaining ground fast as utilities add more PV systems to their generation mix and owners of homes and businesses mount solar panels to their roofs, all amid falling prices.

In 2015, the solar industry set a U.S. record for new installations of 7.3 gigawatts. In 2016, GTM Research expects that number to nearly double to just under 14 gigawatts.

Just as noteworthy, solar installations outpaced gas-capacity additions in the U.S. for the first time in 2015, supplying nearly 30% of all new electric generating capacity in the country, according to an earlier GTM Research and SEIA report.

Yet for all of the bright findings, some clouds hang over the U.S. solar industry.

Stocks for leading U.S. solar-panel producers like First Solar and SunPower have taken a beating, thanks to declining prices, competition from overseas and other factors.

SunPower stunned investors in August when it announced it might lose as much as $175 million this year, after saying in May it expected to earn as much as $50 million.

Oddly, among the reasons for the company’s current troubles was a decision by Congress in December to extend an investment tax credit for solar installations by five years. While welcomed by the industry, the decision “removed the urgency” for construction to begin on some new projects, SunPower’s chief executive, Tom Werner, told investors in August.

“Beyond 2016, expect that the pace of the U.S. power plant project deployments will be reduced for the next two years,” Werner said. “Customers are now in some cases waiting to see how (power purchase agreement) pricing develops before committing to further procurement.”

Despite that cautionary note, Werner said “we remain bullish on the longer-term prospects for U.S. power plant deployment,” particularly given his company’s expectations that the Obama administration’s Clean Power Plan will be implemented, despite a legal challenge of the policy by some states and utilities, and state commitments to renewable energy will remain constant if not grow.

The Clean Power Plan sets a 2030 target for reducing carbon pollution from the power sector by 32% below 2005 levels.

Moreover, SunPower and other solar manufacturers and installers see more opportunities for residential and commercial installations, even as regulators in Nevada and other states reconsider policies that encourage such investments.

“This is a period of transition that markets go through,” Werner told me the other day. “Different segments of the market will grow at a different pace.”

Bill Loveless —@bill_loveless on Twitter — is a veteran energy journalist and podcast host in Washington. He is the former anchor of the TV program Platts Energy Week.