The market for solar panels has remained on an upward trajectory for years and it's showing no sign of slowing down.

Solar industry on upswing despite low price of traditional energy sources

The energy industry is currently undergoing a major revolution as solar power continues to move into areas previously reserved solely for traditional energy sources. This shift toward clean energy production comes even as the price of traditional sources declines, indicating a growing demand for renewable energy sources that extends beyond merely economic factors, although cost considerations always play a role in the decision-making process.

Solar power makes strong progress

The market for solar energy has never been more formidable, with installation and capacity increases experiencing a banner year in 2015. As more end users spread the word about the cost savings and environmental benefits associated with solar power, the industry should continue to see big gains.

After only 2 cumulative gigawatts of solar photovoltaics were installed in 2010, this number topped 25 GW in 2015, according to the Solar Energy Industries Association. The residential solar market saw the most growth compared to commercial and utility scale installations, with solar energy for homes expanding 66 percent year over year in 2015 and adding 2 GW of its own. The utility sector added 4 GW in 2015, accounting for a 6 percent increase from 2014's additions. Although the commercial sector was relatively unchanged, it still installed more than 1 GW of new solar capacity during 2015. Collectively, the U.S. installed 7.3 GW in 2015, which is 8.6 times the capacity end users installed just five years earlier.

"For first time ever, solar capacity additions outpaced natural gas capacity additions."

Further, the SEIA recently announced that the U.S. added 7.286 gigawatts of solar photovoltaics in 2015. Last year also saw renewable energy sources supply 29.5 percent of all new electric generation in the U.S., marking the first time ever that solar outpaced natural gas capacity additions. SEIA President and CEO Rhone Resch lauded the progress being made on solar installation and capacity additions.

"Without a doubt, 2015 was a monumental year for the U.S. solar industry, and perhaps what's most amazing is that we're only getting started," Resch said. "Over the next few years, we're going to see solar continue to reach unprecedented heights as our nation makes a shift toward a carbon-free source of energy that also serves as an economic and job-creating engine."

According to the Bloomberg Council for Sustainable Energy, solar and wind have been the fastest growing energy technologies in the U.S., and since 2008, these sources have more than tripled in capacity, going from 27 gigawatts to 87 gigawatts in 2014. With clean energy investments jumping 7.5 percent annually to $56 billion in 2015, according to Bloomberg Business, the industry is poised for greater growth in the years to come. As report after report indicates, consumers – whether for the sake of residential, commercial or utility-scale products – are opting for the long-term savings, lower utility bills and smaller carbon footprints offered by solar power.

Sustaining job growth

An expanding industry must also have a sufficient amount of workers to facilitate the construction and exchange of goods. Without enough individuals to handle the demand, companies will be unable to broaden their operating capacity. Thankfully, this is not the case for the solar industry, as it has been creating and sustaining strong job growth.

As the solar industry continues to expand, it will remain a good source of new job creation.
As the solar industry continues to expand, it will remain a good source of new job creation.

According to estimates by the Solar Foundation, the solar industry created nearly 115,000 jobs from 2009 through 2015, an increase of 123 percent over that time period. With the most recent numbers indicating a growth rate of 20.2 percent between 2014 through 2015, job creation in this sector continues to outperform expectations. Since the 2014 U.S. Census, 1.2 percent of all new jobs were created in the solar industry. As this burgeoning market becomes a larger fixture on the energy landscape and electricity grid, it should continue to create a viable job market for sustainable manufacturing, engineers, distributors, installers, maintenance workers and more – all signs of a strong and sustainable industrial sector.

Overtaking fossil fuels

The uptick in solar power installation and capacity is disrupting the energy industry status quo. For the second straight year, clean energy generation surpassed fossil fuels. Although a significant portion of this growth came from wind farms, much of this was due to a federal tax credit that was set to expire in 2016, and developers were rushing to take advantage of this deduction. However, solar installation and capacity continue to increase and make more inroads across the country and the globe, all without the need for additional government subsidies.

This upward trend in solar power has come at the expense of traditional energy sources derived from fossil fuels, such as burning coal, oil and natural gas. Even as the cost of these traditional energy sources continues to decline, these sources are still unable to keep pace with the long-term cost savings consumers gain after installing solar panels. According to the Energy Information Association, the price of residential electricity in 2016 is expected to decline by 0.3 percent, however analysts anticipate this cost to leap by 2.4 percent the following year. In comparison, residential solar prices have halved since 2010 while utility-scale solar has attained ever larger savings.

As electricity costs fluctuate, those end users who choose to install solar systems over using traditional energy sources know they're going to receive significant and measurable cost savings for the next few decades. Speaking with Bloomberg Business, Colleen Regan, a BNEF analyst specializing in North American power markets, noted that solar systems are becoming more popular than traditional sources of energy production due to the economic feasibility of installing them.

"This is a long-term trend," Regan said. "System costs have really come down for renewables, which makes the case for installing them a lot stronger."

Another contributing factor to the growth of the solar industry is the declining cost of producing electricity from renewable sources, which has narrowed the gap from power generating by traditional sources. According to Bloomberg Business, the median cost of producing baseload power from solar dropped from $500 a megawatt hour in 2010 to $200 in 2015. Natural gas, coal and atomic plants, on the other hand, generate baseload power at $100 a megawatt hour. And as solar power technology continues to improve, the cost to generate power will only decline.