(Bloomberg) -- Residential solar isn’t white-hot anymore. After a bumper 2015 and a solid 2016, the U.S. residential-solar market is poised to contract 13 percent this year, according to a report Thursday by GTM Research and the Solar Energy Industries Association.
Installers will add 2.27 gigawatts of residential solar this year, down from 2.6 gigawatts in 2016, GTM forecasts. That would be the first slump after 16 straight years of growth.
The decline reflects a maturing market as companies that spent years chasing rapid growth are now increasingly focused on profitability. The shift also comes as pushback from utilities prompts key states including Arizona and California to revise incentive programs that have been important drivers of consumer demand.
The decline is “really a big deal,” Austin Perea, an analyst at GTM, said in an interview. “For a market nearing maturity, it’s hard to grow by leaps and bounds every year.”
There have been hints of a market-wide slowdown. The biggest U.S. rooftop-solar company -- Elon Musk’s Tesla Inc. -- is adding far fewer systems this year than its SolarCity unit did before it was acquired a year ago. Vivint Solar Inc. installations have been mostly flat in 2017. And while Sunrun Inc. expects installations to grow 15 percent in 2017, that’s down from last year’s 39 percent surge.
“Tesla has been pivoting away from the growth-at-all costs model,” Perea said.
Residential installations in the third quarter fell 10 percent from the second quarter, according to GTM.
Total U.S. solar installations, comprising residential, commercial and utility-scale projects, were 51 percent lower than the same period in 2016. GTM said the decline is largely due to a surge in the second half of 2016, when developers were racing to complete projects to qualify for U.S. tax credits that were scheduled to expire last year (they were eventually extended).
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