Solar power in the United States has had a rocky existence. There has been talk of generating power from the sun for a long time. A solar module was actually a plot device in the 1974 James Bond film The Man With the Golden Gun.
It has been a long road.
But today, the age of solar has arguably arrived. While not an enormous chunk of U.S. electricity generation, we did manage to install 2,387 megawatts (MW) of solar PV in Q2 2017 nationwide. This brought the U.S.'s total solar capacity to 47.1 gigawatts (GW) -- power enough to electrify 9.1 million American homes.
While starting from a relatively low base, the utility-scale solar producing capability will have increased from 10 gigawatts at the end of 2014 to 27 gigawatts in 2017. That is a typical yearly growth rate of 39%, making solar the fastest growing form of renewable energy.
As one of the cleanest form of domestic energy, Solar has begun to pop up in surprising places. And this might just have major implications for one of the top solar stocks today: First Solar (FSLR -3.22%).
Solar is beginning to pop up everywhere. A huge solar farm that helps power Indianapolis International Airport. Image source: author photo.
The usual suspects
Solar power is more widespread in the United States than ever before. To get a firm grasp of just how surprising some of the places solar is experiencing explosive usage is, let's start with a list of the usual suspects: states where the sun shines, regulations are amendable, and demand for energy is growing.
Indeed, a list of the fastest-growing solar usage by state inevitably includes California, Utah, Texas, and Florida. And for good reason, seeing the immediate potential that increasingly efficient solar systems offer their grids, these states have moved quickly to the front of the pack.
Unsurprisingly, California leads the nation with 13,241 megawatts of total solar capacity (over 5,000 of it installed in 2016). That's enough to power an estimated 3.32 million homes. Not to be outdone, Florida continues to make good on its nickname as the "Sunshine State." Last year, Florida installed 404 megawatts of capacity and continues to make strides. This summer, lawmakers in Tallahassee voted to break ground on a huge 120-acre solar farm within the city with plans for a second in the works.
Here are the top ten states for solar, according to the Solar Energy Industries Association:
Source: Solar Energy Industries Association.
One name on the above list no doubt stands out to the reader: Texas. Practically the American home of the fossil fuel industry, Texas has led the way in the adoption of renewable energy sources like solar and wind. Proving once again that economics always wins in the end. It should also be noted that solar installations has served as an ideal career choice for laid-off oilfield workers amid the current oil downturn. Last year, the Lone Star state installed over 1,200 MW of solar capacity -- the 9th highest of any state in the nation.
And while the states on the above list more or less make sense (offering a mix of progressive energy policies and/or an above average number of days blessed with blue skies), there are a few states beginning to get in on the solar game that are downright unexpected.
Solar, eh?
One of the fastest growing markets for solar installations today is, of all places, Minnesota. According to the Minnesota Department of Commerce, it has increased solar output twelve-fold since 2015. You can be forgiven if you're surprised. Minneapolis, MN averages 196 days of sun per year, while SoCal metropolis Los Angeles averages 292.
Minnesota's solar growth has been thanks to a particular piece of legislation: The Solar Energy Jobs Act of 2013, which in addition to mandating that 1.5% of the state's power come from solar energy by 2020, also gave way for the uncapped usage of community solar (essentially a solar array that is shared by more than one home). The reaction has been massive.
Currently, there are enough community solar projects in Minnesota to power 10,000 homes, with another 1,000 projects in the planning or development stage -- the equivalent of around 1,000 MW of community solar capacity. At the end of last year, just about 120 megawatts overall existed in community solar tasks across the entire U.S. of A.
What this means for solar investors
The reader has no doubt been wondering what the implications of all this are for solar stocks. And while it is just one data point, Minnesota's status as a leader in the community solar sector points directly to one immediate beneficiary: First Solar.
You see, First Solar in the midst of a major shift in its business. Seeking to focus on offering its top of the line solar modules to utility-scale customers. It is doing so because that is where the industry is headed. And yet there is demand for direct purchases of solar cells (community solar members can never truly purchase solar power directly, but through the grid and via rebates), as evidenced by the reactions of Minnesota's citizens.
The bottom line is this: the sands of the solar industry continue to shift. And yet through it all, First Solar has been frequently chosen as the manufacturer/supplier of the end product: solar modules. In fact, the Minnesota Solar Energy Industry Association lists just two companies that have positioned themselves to take advantage of Minnesota's energy standards legislation: Edina, MN-based Geronimo Energy and, that's right you guessed it, First Solar.
First Solar seems to be multiple steps ahead of the competition in adapting to an ever-changing solar industry. Indeed, as far back as 2014 the company was making strides in anticipation of the community solar trend. Shareholders should take heart, as management seems to have a solid pulse on the state of the solar industry and how to adapt their business.
