In the first quarter of this year there were 71.3 megawatts of residential solar installed in California’s three investor-owned utility territories, according to our just-released U.S. Solar Market Insight report. Of that total, 13.2 megawatts (18.5 percent) were installed without the support of rebates from the California Solar Initiative (CSI) or any other state-level program.
It would be hard to overstate the significance of this, so I’ll reiterate. In the first three months of this year, around 3,000 residential solar installations were completed in California with no state incentives. These installations did benefit from a number of things: full retail net metering (we’ll come back to this), the federal Investment Tax Credit and accelerated depreciation, and California’s relatively solar-friendly rate structures. But even so, this is emblematic of a sea change in the solar industry and, even more importantly, the energy industry.
Historically, residential solar markets in the U.S. were exclusively driven, and constrained, by state- and utility-level incentives, often in rebate form. When a sufficiently large rebate was introduced, the market reacted, but once rebate funding was depleted, the market disappeared. This served as a de facto cap on residential solar growth, and it is why the California statistic is so significant. If state-level incentives are no longer required, there are 3.5 years of runway before the ITC expires for the market to adapt, expand and mature. Assuming nothing else serves as a major barrier -- and this is a big "if" given net metering battles and the ever-increasing need for project finance -- the sky is the limit.