2015 was a banner year for solar policy: Obama announced his Clean Power Plan, Pope Francis came out in favor of incentives for renewables and against fossil fuels, the California Public Utilities Commission announced its preliminary decision that Net Metering 2.0 should be at the retail rate (the deal’s not done; there are still extra charges), and Congress -- in the biggest surprise of all -- voted to extend the ITC for five more years.

I don’t know how much influence the solar industry had on the president and the pope, but I do know how diligently the solar industry worked toward extending the ITC and a favorable decision at the CPUC. With the ITC secure for another six years, my crystal ball for solar is clearer than last year (I did not expect the ITC renewal until the end of 2016). So here are my predictions for rooftop solar in 2016.

1. The rooftop solar industry will focus on steadier, more sustainable growth. Ironically, this means that customer demand in 2016 with the ITC extension will be slightly less than we expected demand to be in 2016 without the extension. With no incentive cliff to use as a closing tool, we need to recalibrate our 2016 sales expectations. Indeed, a quick look at GTM’s forecasts indicates about a 300-megawatt drop in residential demand between the two scenarios -- but steadier growth in subsequent years.
2. Manufacturers and installers were ramping up capacity to meet expected U.S. demand in the last year of the ITC. Until mid-December, rumors of shortages in all market segments implied steady or even higher prices. Now, with slightly higher supply and lower demand levels in 2016, we can expect continued module, inverter and BOS price reductions.
3. Local and regional installers will continue to gain market share. Although smaller installers pay more for equipment, their lower overhead and customer acquisition savings enable them to operate profitably. Companies that operate with a hybrid business model -- such as financing, customer acquisition or simply installation wrench work -- will also gain market share in 2016.
4. Adam Smith’s invisible hand will wave away the impact of the module tariff dispute. There is now so much cell and module production around the world that multinational manufacturers can shift production to maintain tariff compliance. No longer will a company’s headquarters location define its business practices, quality or manufacturing source.
5. Soft costs will continue to go up as a percentage of the total installed cost to homeowners. Essentially, equipment costs will decline faster than direct and indirect labor costs. Germany has demonstrated that national standardization of financing, permitting, interconnection and equipment requirements will reduce soft costs. Although politically challenging, this national approach is the best way to achieve the SunShot goals.
6. Even with slightly higher interest rates, homeowners will have more choices for system financing: national and regional banks, credit unions, specialized solar lenders, and PACE. Leases and PPAs will continue to thrive, but will have to reduce their monthly or kilowatt-hour price to compete with other solar financing sources.
7. Investments in all segments of the U.S. solar industry will increase. VCs will emerge from their cleantech shells and invest in hardware, software and business models that reduce direct and indirect installation costs -- as well as accelerate solar deployments in new market segments.
8. Rooftop solar companies will clean up their act when it comes to fair marketing practices toward consumers. No solar company wants the Tin Man taint, although there are several companies that are being Yelped to death. SEIA’s Consumer Protection Guide spells out these legal and ethical practices, but there will still be crooked companies that will do whatever they can to close a deal.
9. 2016 will not be the year of residential battery storage -- although it's getting closer. Code-compliant, permitted, interconnected and useful (i.e., with a critical load subpanel) battery storage systems will continue to be expensive. Although battery, inverter and BOS costs for residential energy storage systems will continue to decline, we have yet to characterize and reduce the high “soft costs” for these energy storage systems.
10. Product differentiation will become more important than ever. Smart companies will avoid the commodity race to the unprofitable bottom by providing system solutions to their rooftop customers -- not just cheapest individual components. Installers prefer complete solutions that reduce their overall costs. The flip side of the coin is also important: continued price pressure will motivate installers to transition away from premium-price products with commodity features.