(Reuters) - New U.S. solar installations will increase by a third this year, a report published on Thursday showed, as soaring demand by utilities for carbon-free power more than outweighs a dramatic decline in rooftop system orders for homes and businesses due to the coronavirus pandemic.
The solar industry will install 18 gigawatts this year, enough to power more than 3 million homes, according to the report by the U.S. Solar Industries Association and energy research firm Wood Mackenzie. That is 9% less than the group's forecast before the outbreak prompted construction delays, weakened consumer demand and tightened access to financing.
But utility-scale solar is on track for a record year, the report said, with 14.4 GW of new capacity expected to be installed in 2020. State renewable energy targets and solar's low cost are underpinning the sector's robust demand.
Risks to the sector's medium and long-term growth, however, include increased capital costs due to weak markets, reduced demand from commercial and industrial customers experiencing financial hardship, and delays in utility procurement plans.
SEIA reduced its five-year solar installation outlook by about 3% to 113 GW, citing "considerable uncertainty" caused by the pandemic.
Solar accounted for 40% of new U.S. capacity additions in the first quarter, ahead of natural gas and wind.
The smaller market for residential and commercial systems has been hit hard by the pandemic due to stay-at-home orders that slowed construction and selling. Home installations are expected to be down 25% this year, the report said, recovering to rise 26% next year.
It will be several years before the sector reaches installation levels that had been forecast before the outbreak.
Installations in the non-residential segment, which includes rooftop systems for businesses, will be down 38% this year, the report added.