US solar capacity to total 50GW by end of 2016, says Deutsche Bank

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A team led by Vishal Shah at Deutsche Bank has predicted there will be nearly 50GW of installed solar capacity in the USA by 2017, with 20 to 30GW of installed distributed generation expected to be one of the key drivers for growth.

According to NPD Solarbuzz the installed capacity in the US, as of July 2013, was 10GW.

The September Deutsche Bank research note also predicted a rush of installations ahead of the reduction in investment tax credit (ITC) which will take place in 2016.

The analysis is based on levelised cost of energy (LCOE), gross lifetime cost of system and lifetime electricity production, with ITC inclusion also factored in.

The report asserts that grid parity has already been attained in 10 US states as system costs of solar have fallen below US$3 per Watt. Hawaii and California lead tables of states at or near grid parity in the residential, commercial and industrial sectors.

In 2016, when ITCs will still be at the 30% level, Shah expects up to 47 states to have attained grid parity, however, when the ITC is reduced to 10% this figure could drop to 36, which still represents 70% of the total number of states.

According to the forecast, despite rising interest rates, costs will continue to fall. Financing models such as 'yieldcos', where companies put liquid assets into an operational or nearly operational project thus reaping tax benefits across the entire organisation, and strong demand from Japan and China, will, in Shah’s view, offset interest rate rises. Shah predicts that the use of yieldco structures could lower costs of financing projects by as much as 200 to 300 basis points and provide liquidity.

Of the residential, commercial and industrial sectors, residential solar power still has the most markets at grid parity, followed by commercial. Industrial still has the furthest distance to go to attain grid parity.

The report’s finding conclude that US installation rates are expected to continue to rise, with a rush of activity pre-ITC reduction in 2016. According to the report, 2015 is expected to mark an inflection point for solar power in the USA.

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