The U.S. Commercial solar market is set to grow by 30 percent in 2016, according to GTM Research’s latest report, U.S. Commercial Solar Landscape 2016-2020. The report found that the commercial solar market will see over 1.3 gigawatts of solar power installed in 2016. Looking farther ahead it will grow to 3 gigawatts in 2020.
The opportunity in the commercial solar market is huge. Last year a report from Wiser Capital found that in the Northeast alone commercial buildings could host 95 gigawatts of solar power, for instance.
The U.S. commercial solar industry has remained largely stagnant while the residential and utility-scale solar power markets have grown quickly over the past few years. The report anticipated that a number of things will help the market recover and grow in the next few years. “This growth will be driven by the extension of the federal Investment Tax Credit, the growing adoption of solar among national corporations, the increasing availability of financing for small commercial systems, and an expanding market for community solar.”
The report also looks at how the commercial solar developer landscape looks in comparison to the residential solar installer. It found that the top 10 commercial developers currently account for 42 percent of the U.S. commercial solar market. That’s in contrast to the residential market where just the top three solar installers account for nearly half of all residential solar installations.
“The fragmented commercial developer landscape is largely the result of bottlenecks in the customer origination process that make it difficult for any individual player to consistently grow,” according to GTM Research Senior Solar Analyst and report author Nicole Litvak. “There are therefore no dominant players driving the overall market growth, as SolarCity does in residential.”
There are a number of reasons for the lack of consolidation in the commercial market, according to Litvak. Among them are the difficulties of matching singular projects with financing. “There is almost a complete lack of tax equity financing available for systems with non-creditworthy customers,” she said.
Still, those companies leading in commercial solar power have common traits. “These include an emphasis on originating large deals for Fortune 500 customers, a captive source of low-cost capital, and the ability to offer ancillary products and services such as energy storage,” said GTM Research’s Mike Munsell. He observed that regional developers are often doing better in developing projects for local customers, largely because they have knowledge of the local markets and regulations.Tweet