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PV Marketplace: Will the US solar market shine in 2021?

How bright is the 2021 outlook for the US photovoltaic (PV) solar market? Well, it’s complicated.

[UPDATE: The solar ITC was extended at 26% for two years.]

It comes as no surprise that the Covid-19 pandemic hurt residential solar installations in 2020. After a record-breaking first quarter 2020, US solar installs fell 23% in Q2 (quarter-to-quarter). Almost 800 megawatts (MW) of residential solar PV went operational in Q1, but Q2 saw only 617MW solar capacity added.

The drop represented the lowest install total since Q1 2019 and broke a streak of four straight quarters of solar gains.

Despite the drop in residential installs, Q2 2020 also saw the one of the largest increases in utility installations. Utilities added 2.5 gigawatts (GW) of solar power.

But what’s ahead for 2021? Tariffs on solar panels and tax incentives will guide the US solar market next year.

Solar Investment Tax Credit

Despite the scheduled drop in the federal solar investment tax credit (ITC), industry analysts are still bullish on solar (and renewable) market growth for 2021. The ITC dropped from 30% (2019) to 26% in 2020, and will continue its path for 2021 when residential solar customers can receive a 22% tax rebate. The solar ITC was first established in the 2005 Energy Policy Act and has been extended several times since.


If you’re considering solar, now is the time!

On Jan. 1, 2022, the ITC for residential solar installations is scheduled to drop to 10%.  After that, the ITC sunsets and is scheduled to disappear by 2023 (but will remain at 10% for commercial installs).
Call a MOXIE solar expert (855) 669-4387 or sign up for a no-obligation, free consultation today!

Solar Panel Tariffs

The other US policy affecting the solar installation market is the relatively new tariff on PV panel imports set in 2018. It started at 30% on solar panels with an exemption for biface panels.

solar marketIn October 2020, the biface panel exemption was dropped and tariffs on all solar panels were set at 18%. There is some speculation that the incoming administration will keep the tariffs on solar panel imports in an effort to boost domestic PV panel production. 

Did you Know?

In 2012, a 31% anti-dumping tariff was levied on imported panels from China. The trade law allowing presidents to set tariffs was passed in 1974.

Forecasting Solar Markets

Even with the uncertainty of tariffs and tax credits, the Solar Energy Industry Association (SEIA) is predicting 100GW of new solar installations between 2021 and 2025, over 40% growth compared to the previous five years.

Wood Mackenzie Power and Renewables and SEIA jointly produce a quarterly report on the state of the solar market. Read a summary of the Q3 report at SEIA.org.

How do you collect the ITC?

Here’s an explainer on filing Form 5695 for Residential Energy Credits which can be spread over multiple years (if your year-to-year tax burden is too low).

The ITC is an incentive to buy a solar system outright instead of leasing, but a handful of states (and D.C.) also offer solar renewable energy credits (SRECs) to sell back to utility companies while leasing panels. 

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