(Reuters) – U.S. solar installations fell 15 percent in the third quarter as the Trump administration’s tariffs on overseas-made panels forced developers to put off large projects, according to a report commissioned by the industry’s primary trade group.
Current weakness in the utility-scale market, however, will be offset by larger volumes of projects than had been expected over the next five years because solar energy is now cheaper than ever, the report said.
Quarterly installations of utility-scale solar were 678 megawatts, the lowest quarter since 2015 and a more than 30 percent decline from a year ago, the report by Wood Ma
The slowdown is a shift for solar, which has experienced runaway gains in the last decade. Through the first three quarters of the year, solar accounted for 30 percent of electricity generating capacity additions.
Large solar projects for utilities are the most vulnerable to the 30 percent tariffs as panels can account for up to half their costs.
Trump announced the levy on all imported solar panels in January, his opening salvo in a trade war aimed at helping U.S. manufacturers rebound from years of decline. Solar installers opposed the move because they rely on cheap imported panels to compete with fossil fuels.
Most of the panels installed in the United States are made in Asia by companies including China’s JinkoSolar Holding Co Ltd, Canadian Solar Inc, and U.S.-based SunPower Corp.
Wood Mackenzie lowered its 2018 utility-scale forecast to 6.6 GW from 6.8 GW as more projects get pushed into 2019.
The firm raised its forecasts for 2019 through 2023 by a combined 2.5 GW, however, as utilities procure projects that will qualify for a federal tax credit that begins to phase out in 2020. Developers will start projects next year but delay buying modules until 2020 or later because the tariff drops by 5 percent each year.
Sliding solar panel prices are also spurring demand from utilities.
A move by China earlier this year to slash subsidies for solar installations has unleashed a flood of low-cost Chinese-made panels onto the global market – pushing down prices.
Solar energy system prices are at historical lows in all segments of the market, the report said. U.S. module prices are down more than 15 percent from a year ago.
Reporting by Nichola Groom; Editing by Lisa Shumaker