Solar energy market faces challenges in the USSeptember 20, 2016
Investors are showing concern for the solar energy market
The solar energy market may be in for a turbulent future, despite history of growth this sector has experienced in recent years. This year may become one of the most uncertain years in terms of support for solar power. According to the Solar Energy Industries Association, solar installations are on the rise. More homeowners and businesses are embracing solar power as a way to become environmentally friendly and save money on electricity. The problem, however, is that solar stocks are underperforming, with investors showing either disinterest or strong caution in the solar energy market.
Solar installations are growing very quickly
According to the Solar Energy Industries Association, solar installations in the second quarter of this year grew 43% over what they had been a year ago, reaching 2.1 gigawatts. By the end of this year, the solar energy market is expected to grow by 85% in terms of installation, reaching an installed capacity of 13.9 gigawatts. In terms of adoption, 2016 has been a pivotal year for the solar energy market. Despite this growth, however, investors remain wary, unsure whether or not solar power has a bright future.
Investors are uncertain of the future of the solar energy market
The reason solar installations have been on the rise is due to the investment tax credit (ITC). The ITC is meant to provide financial support for solar power projects, particularly those coming from utilities. The ITC was meant to drop from 30% to 10% for utility projects next year, which triggered a rush to install new solar power systems this year in order for utilities to gain the most benefit from the ITC. With the ITC set to diminish in 2017, investors have begun to show more caution in the solar energy market, as many see large-scale projects lacking the financial support and viability to reach completion and begin generating electricity.
Solar sector will continue to confront many challenges in the coming years
Over the long-term, the solar energy market shows great promise, but energy developers, investors, and utilities are likely to face many challenges in the coming years. Financial support is likely to be the most significant of these challenges. Large-scale projects are notably expensive, making them somewhat less attractive when compared to more conventional energy solutions. With tighter emissions regulations and growing concerns regarding climate change, however, the solar energy market is expected to see more support in the near future.