Solar energy has been a fast-growing industry in America and around the world since the mid-2000s. Here’s a look at how solar power has evolved and where it’s headed in 2022.
Introduction to the Solar Industry
The concept of generating energy from the sun goes back to at least the 7th century B.C., when people used it to light fires with magnifying glasses. Then within four centuries, people were lighting torches with a combination of sunlight and mirrors. By the late 18th century, ships used solar ovens for long journeys.
Scientists began to develop solar cells made from selenium in the 1880s. The first silicon-based photovoltaic (PV) cells were developed in 1954 at Bell Labs, the research firm that played a leading role in modern computer technology. The first uses of solar panels were on satellites during the NASA space race in the late fifties.
The main problem with solar energy over several decades was low efficiency, meaning it was difficult to harness much of the sun’s energy with solar panels. From 1957 to 1960, Hoffman Electronics increased solar efficiency from 8 to 14 percent. By the mid-eighties, it jumped to 20 percent, and now entering 2022, it’s up to 33.3 percent.
The U.S. government introduced solar tax credits in 2006, which created a boom in the solar industry. Since then, China has been a major global manufacturer of solar panels, as the price has steadily dropped to affordable levels for homeowners. The cost of solar energy in 1956 was about $300 per watt, including installation. By 2019 panel cost was under 3.00 per watt.
Between 2010 and 2017, the cost of solar-generated electricity dipped for utility companies from 28 to 6 cents per kilowatt-hour, according to the U.S. Department of Energy. This reduction corresponded with a 52 to 16 cent per kWh decline for homeowners. While consumers measure solar power in kilowatt-hours, the top U.S. solar plants measure capacity in megawatts (1 million watts) and annual output in gigawatt-hours (1 billion watt-hours). Today the United States is the world’s number two solar power generator, based on total PV installed capacity in megawatts, but far behind China.
Rise of Solar Companies
During the Obama Administration, the U.S. Department of Energy awarded funding to solar companies such as First Solar, America’s largest solar manufacturer, to finance power plants. In 2011 First Solar was unable to close a $1.9 billion loan to construct Topaz Solar Farm in San Luis Obispo, which at the time was planned to be the world’s largest solar power plant, generating 550MW of PV power. Later in the year, the project was purchased by MidAmerican Energy Holdings, which raised funds through bonds.
Since Topaz launched in 2014, it’s been surpassed in annual output capacity by two other U.S. solar plants: California-based Solar Star (579 MW), which opened in 2015, and Copper Mountain Solar Facility in Nevada, which began the following year. Another big plant, Desert Sunlight Solar Farm, was completed in 2015 with a capacity of 550 MW.
Power plants only make up a fraction of the companies involved with solar in America. These large solar farms partner with utilities that have also helped pave the way for a cheaper, cleaner, renewable energy.
The industry is broken down mainly into manufacturers, installers, marketers, and operations/maintenance firms. Utility-scale PV and installers have been the main drivers of the industry. Other related market segments include concentrated solar power systems, solar water heating, and solar electronic components.
While solar tax credits encourage homeowners to invest in panel installations, the Energy Department has made huge deals with large corporations as well. SEIA reported in 2019 that Apple is the leading installer of solar capacity among businesses in America, with 393 MW for its various data centers. Other top corporations investing in solar energy have been Amazon, Target, Walmart, and Google.
With Apple returning to the number one market cap in America in late 2019, it’s setting the pace for other companies to follow a path toward economic efficiency and social responsibility.
Top U.S. Solar Firms
The top solar manufacturer in America by market capitalization is First Solar, which ranks number 10 in the world. Six of the world’s ten biggest solar panel manufacturers are based in China, including the top 4, led by JinkoSolar. America’s top solar installer is San Francisco-based SunRun, despite Tesla’s acquisition of SolarCity.
As far as solar stocks, investors have rallied around electric car maker Tesla, which also installs home solar panels. They’ve also invested in big utility companies such as NextEra Energy and The AES Corp. Other multi-billion dollar firms connected with solar include Brookfield Renewable Partners, SunPower, and SolarEdge.
Solar Industry Stats and Growth Projections in 2022
SEIA collects data on U.S. solar installations and energy consumption. Other industry metrics are gathered by IBISWorld, which reported that solar industry revenue was $10 billion in 2019. This figure represents an annual growth rate for solar above 36 percent over a five-year period.
The peak year for solar installations so far has been 2016, which was largely due to businesses and residents fearing the Solar Investment Tax Credit (ITC) would expire. Congress then extended the policy through 2022. Installations surged to over 14,000 MW of solar capacity in 2016. The number declined the next few years, but in 2019 experienced more growth, well overall in previous years except 2016. The U.S. solar market is expected to hit $22.9 billion by 2025.
Here are important solar stats released in 2019 by SEIA:
- SEIA projects that over the next five years, installations will more than double in solar capacity, surpassing 100 GW by 2022.
- Over 10,000 U.S. companies are involved in the solar industry, with the largest employers operating as installers.
- About a third of all new U.S. energy installations in 2019 were for solar.
- The geography of solar development plays an important role where solar jobs are based, with California as the leader, generating over 26,000 MW versus distant runner-up North Carolina. Other top solar states are Arizona, Texas, Florida, Nevada, New Jersey, and Massachusetts.
- Over 242,000 Americans were employed in the solar industry in 2019, which was double the number from 2012.
Solar Industry Trends
- While over 90 percent of Americans want solar, only about half want to pay for it, which is why 30 percent of federal solar tax credits through 2022 are vital to the industry. Solar will continue to grow in demand as more businesses embrace it and report energy savings.
- Homeowners will continue to take advantage of solar tax credits at least through 2022 and maybe longer if Congress extends this incentive. The residential solar segment hit an all-time record in Q3 2019 with 71.3 GW of installed capacity, which was enough to power 13.5 million homes.
- California’s new law mandating most new homes and buildings must be installed with solar panels will add further stimulus to the solar industry.
- Solar installations will increase across all market segments through 2022 among non-utility businesses and developers looking to take advantage of federal tax credits. Energy investment models pioneered by Fortune 500 companies will continue to attract big investors.
- Various traditional energy companies will diversify more to include renewables. European developers have laid the groundwork to build a more visible solar presence in the United States.
- Improvements in solar battery technology will continue among researchers. Current home solar batteries typically provide 10 kWh of capacity. These batteries, which have a lifespan of up to 15 years, can be stacked to increase capacity as scientists aim for greater efficiency.
- Tariffs on solar panels from China will benefit U.S. manufacturers such as First Solar, although these tariffs were offset by lower panel prices in 2019.
- Declining prices for solar panels and batteries will continue, attracting new buyers who want to save on otherwise uncertain energy costs. Over 96 percent of net new energy generation capacity in 2022 will come from solar and wind sources, according to Deloitte. Solar construction costs fell by 37 percent from 2013 to 2017.
- Demand will increase for a broad range of solar products such as solar-powered generators, portable smartphone chargers, outdoor motion sensor lights, backpacks, and cookers.