Solar faces a 25% drop in 2022 deployments, SEIA and WoodMac say
Logistical challenges and price increases in the solar supply chain are expected to depress deployments next year, resulting in what could be a 7.4 GW (25%) decrease in solar installations for 2022 compared to previous forecasts.
And, for the second quarter in a row, trade policy uncertainty and supply chain constraints are driving solar price increases across all market segments.
Those are key findings from the latest U.S. Solar Market Insight report released by the Solar Energy Industries Association (SEIA) and Wood Mackenzie.
The report blamed recently dismissed petitions for anti-dumping and countervailing duties on solar cells from Malaysia, Thailand, and Vietnam as causing “significant” shipping disruptions for importers. But even before those import challenges were launched, imports were reeling from the Biden Administration’s late June Withhold Release Order. That U.S. Customs and Border Protection action is focused on raw material supplied from the Xinjiang region of China that is part of much of the supply chain.
The newest insight report said that solar projects will continue to face supply chain challenges in the near term. It said that clean energy provisions in the Build Back Better Act would stimulate solar market growth, if the legislation is passed.
SEIA president and CEO Abigail Ross Hopper tied much of the U.S. solar sector’s fortunes to the legislation, saying in a statement, “We must pass the Build Back Better Act to create quality American jobs, drive transformative solar and storage growth, and overcome supply chain bottlenecks.”
The market report said that rising prices are impacting the utility-scale solar market the most. Prices in that segment dropped by 12% between early 2019 and early 2021, but spikes in the last six months have erased all price declines from this two-year period.
“The U.S. solar market has never experienced this many opposing dynamics,” said Michelle Davis, principal analyst at Wood Mackenzie and lead author of the report. She said that supply chain constraints continue to escalate, putting “gigawatts of projects at risk.” And she touted the Build Back Better Act as a “major market stimulant” for the solar industry, “establishing long-term certainty of continued growth.”
Among the report’s other key findings:
- Solar accounted for 54% of all new electricity-generating capacity added in the United States in the first three quarters of 2021.
- Residential solar installations exceeded 1 GW and 130,000 systems in a single quarter for the first time.
- Residential solar companies have fared better in the face of recent price increases, but tight module supply may impact future installations.
- Commercial and community solar fell 10% and 21% quarter-over-quarter, respectively. Major markets for these segments continue to experience interconnection and equipment delays.
- Due to supply chain constraints and logistics challenges, Wood Mackenzie has lowered its 2022 solar forecast by 25%, a decrease of 7.4 GW.
- Installed costs increased across all market segments for the second quarter in a row, reflecting supply chain challenges.
- In every segment besides residential, year-over-year price increases were at the highest they’ve been since 2014 when Wood Mackenzie began tracking pricing data.
Source: Renewable Energy