Elon Musk, Chairman of SolarCity, which is one of the largest rooftop solar installers in the U.S.  (Photo by Scott Olson/Getty Images)

About two years ago, I wrote an op-ed in the Wall Street Journal, The Hole In The Rooftop Solar-Panel Craze, where I argued that the federal government should stop subsidizing the rooftop solar-panel industry because greener, more economic alternatives are available (like utility-scale solar).

The article struck a nerve among solar advocates (see, for example, herehere and here), but two years later, it looks like consumers and state regulators have finally caught on.  The rooftop solar-panel craze can no longer be characterized as a craze, and there are ominous signs pointing to trouble ahead for the industry.

Let’s start with the most obvious: demand for traditional rooftop solar systems is waning at a time when consumer confidence is high and the real estate market is—in most places—strong.  Year-over-year growth for the rooftop solar industry was down to 16% in 2016, compared to an average year-over-year growth of 63% from 2012-2015.  And according to a report earlier this month in the Wall Street Journal, installation of residential solar-electricity systems is expected to increase by less than 3% in 2017.

Demand is slowing.  But that’s not the industry’s only problem.

Earlier this month, numerous media outlets reported that two of the largest rooftop solar companies—Sunrun Inc. and Elon Musk’s SolarCity Corp.—have experienced very high cancellation rates in 2016 and 2017.  Apparently, as many as 40 to 50% of their customers are canceling orders for rooftop systems shortly after placing them.  And this is all occurring at a time when the larger solar power industry is still humming along.

Nationwide, other types of solar power have generally continued to demonstrate strong growth, including utility-scale, commercial and community solar projects.  In fact, utility-scale solar installations grew at an average rate of 72% per year between 2010 and 2016, according to the U.S. Energy Information Agency—faster than any other generating technology.

So, what’s going on with residential solar, and will it ever be fixed?

A number of factors seem to be contributing to the rooftop solar industry’s troubles.

If you enjoyed this article, share it!Share on Facebook0Share on Google+0Tweet about this on TwitterShare on Reddit0