Q Update: The State Of Distributed Solar

Transcription

1 Q Update: The State Of Distributed Solar Austin Perea Analyst, U.S. Solar 0

2 Installations (MWdc) National-Level Market Overview H ,000 6,000 6,582 The U.S. solar PV market installed over 2 GW Up 12% year-over-year 5,000 Up 8% quarter-over-quarter 4,151 Utility PV 1.4 GW 4,000 3,285 ~60% of U.S. solar capacity in Q ,000 2,110 2,205 2,090 2,203 2,132 2,387 DG remains smallest share of overall quarterly capacity additions 2,000 1,364 1,287 1,395 1,342 1,434 1,430 Non-Residential 436 MW 1, Up 10% over Q Up 31% year-over-year 0 Residential 563 MW Residential Non-Residential Utility Up 1% over Q Down 17% year-over-year 1

3 Unpacking Residential Solar s Slowdown 2

4 Capacity (MWdc) Residential solar continues to face challenges Quarterly Residential PV Installed Capacity (MWdc) Q Q

5 Year-over-Year Growth (%) Despite strong near-term policy certainty, major residential state markets are struggling Q State Market Shares 300% Top Five Markets Year-over-Year Growth 250% 30% 200% 150% Q marks first quarter top five states all experience YoY decline Top Five state markets account for 70% of national installations 41% California Arizona New York Maryland 100% 50% 6% New Jersey All Others 0% 7% 7% 9% -50% California Arizona New York Maryland New Jersey 4

6 Installed Capacity (kwdc) MW Installed Residential solar slowdown began in California in ,000 kw California Installation Volumes by Installer Size 200 SolarCity vs. All Other Installers in California: Capacity and Year-over-Year Growth 40% 90,000 kw % 80,000 kw % 70,000 kw % 60,000 kw 50,000 kw 40,000 kw 30,000 kw Residential solar slowdown began in California in % -10% -20% -30% Year-over-Year Growth 20,000 kw 40-40% 10,000 kw 20-50% 0 kw Sub-1 MW 1-2 MW 2-10MW 10 MW+ Q Q Q Q Q Q Q Q Q Q Q SolarCity All Others SCTY YoY Growth All Others YoY Growth -60% 5

7 Capacity (MWdc) Year-over-Year Growth (%) and hit Northeast markets in full force in H Northeast Markets Q Q Residential Installations Northeast Markets Q Q Year-over-Year Growth % 120% 100% 80% % 40% 20% 0% -20% -40% -60% 0.0 New York Maryland New Jersey Massachusetts -80% New York Maryland New Jersey Massachusetts Q Q Q Q Q Q Q Q Q Q

8 Share of Total Deployments 2016 Avg Cost ($/W) Annual Growth (%) Growing pains among the national residential solar providers Transitioning away from unabated market share capture to profitable growth Annual Growth Rates: SCTY+RUN+VSLR vs. Rest of Residential PV Market 120% 100% 80% 60% 40% 20% 0% -20% Source: GTM Research 90% 45% 106% 24% 66% 78% -1% Growth Rate (SolarCity, Sunrun, Vivint Solar) Growth Rate (Rest of Residential Market) 2016: TPO Market Shares by Residential PV Company 100% 80% 60% 40% 20% 0% Source: GTM Research 45% SolarCity Vivint Solar Sunrun All Others Third-Party Owned Customer Owned Quarterly Residential PV TPO Market Shares in 2016: National vs. California In aggregate: National residential PV companies have a more than 3x higher cost of customer acquisition than the long tail of installers $0.80 $0.70 $0.60 $0.50 $0.40 $0.30 $0.20 $0.10 $0.00 Source: GTM Research SolarCity, Vivint Solar, Sunrun Large Regional (over 2 MW/quarter) Mid-Size Regional (1-2 MW/quarter) Large Local (100 kw-1 MW/quarter) Long Tail 7

9 Capacity (MWdc) Emerging Markets Quarterly Installed Capacity Q Q Utah South Carolina Texas Florida Pennsylvania Q Q Q Q Q Q Q Q Q

10 Capacity (MWdc) Capacity (MWdc) Recent regulatory and policy wins have potential to open up new markets NV, IL Nevada Quarterly Installations Nevada PUC s decision to pull-back NEM and not grandfather had huge impact #7 in 2015 vs. #11 in 2016 vs. #20 in Q Installations trickled into H as they were energized, but stark dropoff thereafter AB 405 decision to restore NEM opens up major new market opportunity though NV Energy general rate proceeding Illinois Forecast E threatens long-term outlook Illinois new RPS program rethinks REC program Adjustable Block Incentive (ABI) 15 year REC program Sets capacity procurement targets ~ MW by E 2018E 2019E 2020E 2021E 2022E Upfront REC functions like cash rebate program, but doesn t diminish tax eligible basis of project, resulting in higher value proposition for customer Reduces volatility of SREC; appeases finaciers 9

11 Axis Title The Near Term Residential PV Outlook: Defined by market transitions 120% 100% 80% 60% 40% 109% 50% 64% 95% 75% 45% 52% 38% 82% 65% 54% 72% Major Trends Defining Residential Solar in 2017 The long tail of installers, with cheaper customer acquisition costs, are on track to grow at a faster rate than Tesla/SolarCity, SunRun and Vivint collectively And the Big Three s pursuit of profitable sales and lower customer acquisition costs will result in a the market contacting 3% from 2016 Major markets continue to struggle despite strong policy environment 20% 0% -20% 23% 15% 20% 5% 2% 5% -3% -13% California Next Five States All Other States Total E 2017 marks the first time California will fall on annual basis this decade Direct ownership will drive the majority of annual installations since 2011 More than half of all states in the U.S. will be at grid parity in H Emerging state markets outside the top 5 (CA, AZ, NJ, NY and MD) to grow 20% in a year of flat national level demand Q second consecutive quarter in which emerging state (Utah, Texas) replaces major state (MA) at #6 largest market 10

12 Non-Residential Solar s Reboot: Growth Beyond Standalone Onsite Solar to Community Solar 11

13 Capacity (MWdc) After 3 Consecutive Years of Flat Demand: Non-Residential PV Grew by 50%+ in 2016, expected to grow 9% in 2017E Policy and Incentive Driven Bubbles Support 2017 Rebound The Top 4 States: Partly fueled by short lived market drivers California: The closure of solar-friendly rate structures Massachusetts: Pull-in of demand amidst closure of SREC programs New Jersey: RPS driven demand for SRECs pulled in from future years New York: Depleting pipeline of virtual/remote NEM projects What s driving a reboot in all other states? The emergence of community solar: 220 MW+ installed in 2016 Utility led community solar: Drove more than 60% of community solar Top 3 community solar states in 2017: CA, MA and MN E 12

14 E 2018E 2019E 2020E 2021E Annual Installations (MWdc) Utility Led Community Solar (MWdc) Emergence of Community Solar: Legislative and Voluntary Segments Both Set to Scale Community Solar Installation Outlook: Third Party Led vs Utility Led Community Solar Within Utility Led Community Solar: Emergence of IOUs Procuring Large Scale Community Solar Coop IOU Muni Third Party Led Utility Led Operating In Development Source: <Insert source> Source: <Insert source> 13

15 Annual Installations (MWdc) Non-Residential PV Outlook: Moving Beyond Onsite, Standalone Solar 2016: First year < 90% of non-residential PV market came from onsite PV 2021: Less than 50% of annual non-residential PV installations will be onsite, standalone PV 3, % 3,000 2,500 2,000 1,500 1, ,075 1,110 1,063 1,062 1,586 1,756 1,671 1,933 2,127 2,471 2,859 90% 80% 70% 60% 50% 40% 30% 20% 10% Share of Annual Installations (%) E 2018E 2019E 2020E 2021E 2022E 0% Non-Residential Community Solar Solar-Plus-Storage Onsite Solar 14

16 The Next 5 Years of U.S. Solar 15

17 What comes next for U.S. solar? 1. Macro level uncertainty: Solar trade dispute, corporate tax reform, NEM and rate reform risk 16

18 What comes next for U.S. solar? 1. Macro level uncertainty: Solar trade dispute, corporate tax reform, NEM and rate reform risk 2. Residential Solar: Near term contraction, sub 12% annual growth in a more fragmented installer landscape, paired with the emergence of loans and cash sales collectively outpacing third party owned leases and PPAs 3. Non-Residential Solar: Continued growth hinges on community solar (near term) and solar-plusstorage (long term) amidst state incentive reductions and TOU rate reforms across major markets 4. Utility Solar: On track for another boom in procurement heading into 2019 in response to the scheduled stepdown of the 30% federal ITC, supporting growth in the timeframe 17

19 September 18 ia.org 29, 2017 Yearly Installed Solar Capacity (MWdc) Total Installed Capacity triples by 2022, reaches 16 GW annually 18,000 U.S. Solar PV Deployment Forecast 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Source: SEIA/GTM Research U.S. Solar Market Insight E 2018E 2019E 2020E 2021E 2022E Residential (PV) Non-residential (PV) Utility (PV) 18

20 Thank You Austin Perea Analyst, U.S. Solar 19

21 Appendix: Utility-Scale Trends 20

22 E 2018E 2019E 2020E 2021E 2022E Annual Installations (MWdc) Market Drivers to Watch: Utility Solar s Reboot Pegged to Non-RPS Demand 12,000 10,000 8,000 4 Key Trends That Will Shape the Next 5 Years Community Choice Aggregation in California The Push for Rate Based Ownership of Utility Solar Future Implementation of PURPA Policies Corporate Demand for Offsite Solar PPAs 6,000 4,000 RPS Driven Non RPS Driven 2,000-63% % Share of Utility PV Pipeline 37% PURPA Voluntary Procurement Retail Procurement CCA 21

23 Installed Capacity (kwdc) Residential solar slowdown began in California in ,000 kw 90,000 kw 80,000 kw 70,000 kw 60,000 kw 50,000 kw 40,000 kw 30,000 kw 20,000 kw 10,000 kw 0 kw Sub-1 MW 1-2 MW 2-10MW 10 MW+ Q Q Q Q Q

24 Annual PV Installations (GWdc) U.S. Solar Market Outlook: Resumption of market growth in Return to 2016 installation levels Resumption of total market growth E 2018E 2019E 2020E 2021E 2022E Residential Non-Residential Utility 23