This past quarter, U.S. residential PV installations were down quarter-over-quarter for the first time since Q1 2014, according to GTM Research’s latest U.S. Solar Market Insight report. This was driven primarily by a slowdown in major state markets, such as California and New York, where issues of customer fatigue and depletion of early-adopter customers have been hurting sales.
But the growth trend in a key emerging market tells a very different story -- and the largest installers are rushing to take advantage of it.
FIGURE: Residential Capacity Additions and Market Shares of the Top 4 Installers in South Carolina
Source: GTM Research U.S. Solar Market Insight report and U.S. PV Leaderboard
The South Carolina residential solar market has grown from under 1 megawatt of new installation capacity in Q4 2015 to more than 9 megawatts in Q3 2016. In this time, national installation companies Vivint Solar, Sunrun, Vision Solar and Suncrest Solar have expanded rapidly in the state to take advantage of favorable solar rebates, which have pushed the state’s residential solar market well past the grid parity point.
In the first three quarters of 2016, these four companies accounted for over two-thirds of new installation volume in South Carolina. Vivint Solar, which is the second-largest residential solar installer in the U.S. according to the latest U.S. PV Leaderboard, entered the South Carolina market as recently as Q4 2015. Sunrun and Vision Solar, the next largest installers in South Carolina, entered the market just a quarter before that, and Suncrest Solar entered in the past year.
This success for the big players in South Carolina comes in contrast to what we have observed in markets such as California, which has seen declining installation growth overall for the past few quarters. In October, we wrote that local and regional installers were growing at a faster pace than national installers in each investor-owned utility territory in California. But unlike in California, in South Carolina, business for the biggest installers is booming.
Success in South Carolina is not limited to the national players. Local installers, which made up approximately a third of the market from Q1 to Q3 2016, grew by more than 25 percent in the last quarter over Q2 and over 100 percent over each of the two quarters prior. Most of these local companies began installing in late 2015, just like their larger competitors. But despite experiencing quick growth, these local installers remain small. Even the largest ones remain small, with few set to install over a megawatt for the year.
FIGURE: Quarterly Growth of National and Local Installers in South Carolina
Source: U.S. PV Leaderboard
What remains to be seen is how local installers will fare in the market after 2017, the year in which capacity additions are expected to reach their peak in the state as rebates expire and the net metering cap in SCE&G territory is hit. If less favorable solar economics cause the national installers to pull back or even pull out of the market, then local installers, which do not have the option or desire to operate in other markets, could fill this void. But if continuously falling solar costs allow the national companies to continue to operate and flourish in the state, then local companies may see their market shares squeezed even further.
As more states move past the grid parity line, more opportunities for installers will arise. And if South Carolina is any indication, there is still room for success for the large, national installation companies. If public companies are able to adapt to changing consumer trends, such as increased demand for loan products, then success in emerging state markets could counteract the deceleration of growth in mature markets like California, allowing these companies to maintain their hold on the national market.
***
GTM Research's U.S. PV Leaderboard tracks market shares for solar installers, inverter manufacturers and module suppliers in the U.S. residential and commercial markets. Contact [email protected] for pricing information.