2018 was supposed to be a terrible year for the U.S. solar industry as subsidies, well, subsided and President Trump’s tariffs raised the cost of solar panels. But the reality wasn’t nearly as bad as feared.
The U.S. Solar Market Insight report for 2018 — produced by the Solar Energy Industries Association and Wood Mackenzie Power & Renewables — says that installations fell just 2% to 10,600 megawatts (MW), or enough to power 1.7 million U.S. homes, and that the market shows signs of life in coming years. For investors, this opens a huge opportunity for beaten-down solar stocks.
Where U.S. solar saw strength in 2018
The strongest segment year over year was residential solar, which grew 7% to 2,400 MW. California once again leads the industry with nearly 1,000 MW installed, but Nevada, Florida, and Utah showed strong growth from very small installation bases of less than 100 MW. For reference, 1 MW of installed solar power capacity can generate enough electricity for 90-260 homes depending on various geographic factors.
Residential solar benefited from the fact that solar panels themselves are a fairly small percentage of installation costs (reducing tariff impacts), and short lead-time installations. As the year progressed, global solar-panel prices plunged by about one-third, offsetting tariffs, which helped bring costs down to 2017 levels.