New post-incentive business models are driving Solar PV

Solar PV is at the head of the class globally, thanks to new business models driving consumer adoption.

The global electric power industry is evolving into a model that offers more diversity, both in terms of generation and in the ownership of generation assets, according to Navigant Research.

Following years of unsustainable pricing and oversupply, demand for solar PV systems has finally caught up, with 2015 expected to be the year when the global solar PV market shifts and starts to compete with other technologies, and solar leases, green bonds, and yieldcos have reduced the barriers for customers wanted to adopt solar PV systems, as well as increased the potential for profits for utilities, according to Navigant.

These business model innovations will continue to further drive the industry in the coming years when incentives are scaled back in most major markets. In fact, Navigant predicts global revenue from solar PV installations will total more than $1.2 trillion from 2015 to 2024.

“Solar PV and renewable energy generation as a whole is a policy-driven industry,” said Roberto Rodriguez Labastida, senior research analyst with Navigant Research. “Legislation and regulation regarding solar PV development are being driven by increased concerns about the environment and greenhouse gas emissions, as well as by a desire for greater energy independence and to spur job growth and entrepreneurial opportunities in emerging parts of the economy.”

According to preliminary numbers from GTM Research, 59 gigawatts of solar PV were installed globally in 2015 — a 34 percent increase over 2014’s total. GTM senior solar analyst Mohit Anand agrees that solar is very much regulatory driven. A case in point is the December extension of the federal Investment Tax Credit, which is driving the expected U.S. share of global PV demand between 2015 and 2020 from an average of 10 percent to 15 percent, according to GTM Research.

“The fourth quarter of 2015 showed that global PV demand is very much at the mercy of government support, which can often be unpredictable and idiosyncratic, leading to often negative but sometimes positive outcomes,” Anand said.

GTM says feed-in-tariff (FIT) pullbacks in Japan, the U.K. and China, on the other hand, have tempered expectations.

“The distributed solar PV generation market continues to transition from being dependent on lavish feed-in tariffs and environmentally conscious wealthy homeowners to a cost-effective source of electricity that is gaining traction across market segments and customer types,” Rodriguez Labastida said. “The successful adoption of new business models is expected to continue to further drive the industry in its transition to a post-incentive world in most major markets.”

In 2016, the United States and China are expected to lead the global market, according to GTM Research, which is expected to see a total of 64 gigawatts of solar PV installed. By the end of 2016, GTM Research predicts that the cumulative worldwide PV total will reach 321 gigawatts.