Dive Brief:

• 2018 was the second-biggest year for commercial solar installations, with 1,144 MW installed, according to the Solar Energy Industries Association's (SEIA) 2018 'Solar Means Business' Report.

• There are currently 7 GW of capacity in place across 35,000 installations. Apple is the top corporate solar user, with 393 MW installed, while Amazon and Target are second and third. And corporate interest is not restricted to tech and retail — manufacturing and real-estate companies Solvay and Prologis ranked in the top ten as well.

• The report highlights that more than 50% of all installations have occurred since 2016, in spite of challenges from solar cell tariffs and changing incentives. 

Dive Insight:

As interest in solar from companies continues to grow, one of the most significant takeaways from the report is the sheer volume of commercial procurements, which SEIA says totaled nearly 4 GW over just the last 18 months. 

"About 15% going forward of utility-scale development will have a corporate off-taker," Abigail Ross Hopper, SEIA President and CEO, told Utility Dive. "That is a significant shift in the marketplace. It's obviously usually big utilities that are off-takers for those projects."

Small businesses have also increasingly begun to install solar as costs have come down and financing has become more feasible, said Hopper. Companies with smaller energy needs have aggregated their power purchase agreements (PPAs) and others are developing renewable energy portfolios that function similarly to mutual funds.

"I think as procurement options have broadened, as bankers get more comfortable with the product, and as loans and PPAs become more standardized, it's easier for a smaller business to really navigate that contracting space," Hopper said.

Solar procurement is increasingly done offsite and through PPAs, the report said.

"[T]he low upfront investment, limited risk and predictable long-term electricity rates offered by PPAs" can be attractive to businesses, it read. Last year, 47% of new onsite commercial capacity used a PPA — the highest ever.

LevelTen, which has created a marketplace that aggregates PPA buyers and sellers, expects solar offer prices to remain low for the next few years and interest from buyers to remain high, in spite of federal tax credit roll-offs. 

However, the policy environment for PPAs varies by state, with some more favorable than others.

California leads among states in terms of installed commercial capacity, followed by New Jersey, New York and Massachusetts. All of these states have favorable policies, although California and Massachusetts are transitioning "to new rate designs and incentive structures," which may contribute to a decline in the non-residential solar market in 2019 relative to 2018.

Companies "wishing to retain the [Solar Renewable Energy Credits] from their system to meet internal environmental goals likely sets a ceiling on the growth of PPAs in the commercial market," the report said. Even so, PPAs will continue to play an important role going forward.

Growth in offsite solar is expected to continue — 3.3 GW were procured in 2018. SEIA forecasts offsite solar procurements of 2 GW annually for the next several years, and deployments to hit 1 GW in 2020 "and increase in proportion to future procurement expectations."

The advantages of offsite projects include economies of scale and the potential for multiple companies to own stakes in large projects. 

SEIA expects 2019 may be a slower (but still top three) year for deployment.

"Growth is expected to resume in 2020 as module tariff reductions and [investment tax credit (ITC)] demand pull-in help to boost growth," the report said. SEIA has been advocating for an extension of the ITC.

"If the investment tax credit were to be extended, the 30% credit would be available at the same time that the tariffs that have been imposed on our product are also coming down," Hopper said. 

In spite of the looming roll-offs, commercial solar has momentum: Corporate solar deployments have increased 23-fold over the last ten years.