Solar energy is steadily becoming a more formidable source of clean energy all over the world, and new projections indicate the trend will only continue into the new year. Mercom Capital Group released its predictions for global solar growth in 2016, and the U.S. is set to be one of the top contributors.
Last year, Mercom predicted 2015 would reach 57.8 gigawatts, and for 2016, the bar has been raised to the target of 64.7 GW. While this accounts for nations across the globe, three front-runners will be responsible for the majority of new installations.
"The largest markets in 2016 will again be China, the United States and Japan; the United States is set to overtake Japan as the second largest solar market behind China," said Raj Prabhu, CEO and co-founder of Mercom Capital Group. "These three countries will account for about 65 percent of installations next year."
A promising year ahead for the US
While ranking in the top three is impressive in its own right, America's expected rise to second place in solar over Japan only further illustrates the nation's continued efforts to bolster green energy initiatives. The organization expects a 13 GW growth in the U.S. next year, which is especially impressive given that the 2015 predictions pegged the nation at just 8 GW of growth in 2015. In comparison, Japan was slated to install 9.5 GW in 2015, but experts are predicting only another 9 GW will be added to the country's existing solar capacity in the coming year, revealing a potential slowdown in its solar growth.
"In terms of year-over-year growth, the U.S. is at the front of the pack."
It's also worth nothing that, while China is expected to install 19.5 GW in 2016, this is only a slight increase from 2015's prediction of a 17 GW growth. In terms of year-over-year growth, the U.S. is at the front of the pack. Mercom indicated a key driver of this growth is the end of the current 30 percent investment tax credit for both residential and commercial solar. At the end of 2016, the ITC is poised to drop to 10 percent unless officials grant an extension.
Fate of the ITC extension yet to be decided
For many, the ITC extension is seen as unnecessary, given solar's impressive trajectory in recent years. However, industry insiders are advocating for Congress to extend the tax break for numerous reasons. StreetInsider.com reported that many solar companies are seeing stock prices jump up with the anticipated growth in 2016, but these very same businesses are still calling for the ITC to continue on.
Vishal Shah, an analyst from Deutsche Bank, told the news provider that there are numerous advantages to extending the tax credit for another five years. Perhaps most importantly, he explained that the sector would be more likely to continue trending upward well into 2021. Shah also explained that extensions could lessen 2016's growth, but only because it would be more likely to continue on into 2017 and beyond.