Looking Back at the 2016 Ups & Downs for Solar EnergyBack to Top
The solar-power industry saw a bunch of ups and downs in 2016, but solar companies are adapting their plans to cope with the market changes and should emerge stronger within the next year.
With that in mind, let’s take a look back at the roller-coaster ride the market took over the past year. Among the key positive highlights included:
- We started with a fair amount of optimism with the extension of the solar investment tax credit (ITC) in December 2015. The expectation was that the 5-year extension would provide some certainty and stability as the solar market continued to drive costs down to the point of grid parity.
- 2016 is expected to exceed 10 GW of solar installations for the first time.
- Solar customers and developers benefited from a global oversupply of photovoltaic (PV) panels, which resulted in an unprecedented drop in PV-panel and inverter prices to drive solar installations to and sometimes beyond the point of grid-parity costs.
The year also included some downside issues:
- SunEdison filed for bankruptcy protection. While bad news for the industry, the market consensus was that SunEdison died from “self-inflicted” wounds, and its failure was not an indicator of a larger flaw within the renewable industry.
- The slowdown in demand for solar projects in China resulted in the PV-panel oversupply situation, which is strongly impacting PV-panel manufacturers. The SunEdison bankruptcy also put a stop on almost 1 GW of projects in their project pipeline. And despite all the activity we were seeing in the solar market, there was a definite slowdown in project completion because of the lack of urgency to complete projects that came with the 5 year ITC extension.
- While the drop in PV-panel pricing has been a boon to solar developers and customers, it’s taken a toll on PV-panel companies. Just as we were digesting the loss of SunEdison, we started to see First Solar’s stock tumble. And then SunPower announced it was slashing 1,200 jobs and projecting a sharp downturn in earnings. It then announced another 2,500 jobs cuts and the closing of production facilities.
And it should go without saying, no other company has seen more ups and downs than SolarCity, which in a $2 billion deal became a subsidiary of Tesla Motors.
So, what does this all mean? In a nutshell, SunEdison’s lack of discipline has been met by an abundance of discipline by First Solar, SunPower, and others to focus on adapting to the changing market place. The Tesla acquisition of Solar City, for example, shows the development of new business models that merge storage with solar and solar with electric vehicles. That said, the PV-panel oversupply will end in 2017 as inventories of excess panels are consumed, and the result will the continued shuttering of PV-panel production.
While the ups and downs we’ve seen this year have brought some stress to those of us in this industry, we’ve learned more than a few lessons for the long term. Indeed, in the coming year, we can certainly expect more ups and downs (the market impact from a Trump presidency, possibly greater integration of battery storage with solar, and state-level changes to solar renewable energy credits or renewable portfolio standards).
But that’s OK. We’re used to it now.
December 16, 2016