After a decade of explosive growth in the residential solar photovoltaic (PV) market, in 2017 California saw its first decrease in annual residential solar installations. This paper suggests that the most probable cause of this downturn is the beginning of market saturation in the residential retrofit market (as differentiated from the new construction market). It also illustrates how the new construction market, which is growing rather than declining, can mitigate a downturn in the retrofit market when sufficient housing growth and aggressive new construction policies or initiatives exist. The analysis suggests that 15 - 20,000 jobs are at risk in California if steps are not taken to mitigate the downturn.
The paper discusses the dynamics of technology diffusion and offers data illustrating that the residential solar retrofit market is following a classic S-curve diffusion pattern. It further provides implications if current adoption trends continue and offers a forecast of residential solar adoption for several scenarios regarding the new construction market. This paper is relevant to electric utilities, utility regulatory agencies, solar providers, distribution system planners, legislators, and anyone else interested in the future of residential rooftop solar. The lessons learned in California apply equally to other states, which are advised to consider the dynamics at play and to plan accordingly.