The last “Understanding the US Solar Marketreport from SEIA and Wood Mackenzie, shows solar price increases across all market segments, largely attributed to trade policy uncertainty and supply chain constraints.
The recently rejected petitions for anti-dumping and countervailing duties on solar cells from Malaysia, Thailand and Vietnam caused significant shipping disruptions for importers, further exacerbating supply chain restrictions. Logistical challenges and price increases in the solar supply chain will weigh down deployment in the coming year, resulting in a 7.4 GW (25%) drop in the 2022 forecast compared to previous forecasts.
Solar projects will continue to face supply chain challenges in the near term, but new forecasts show that, if passed, the clean energy provisions in the Build Back Better Act will fuel solar market growth. The legislation will enable the solar industry to continue its robust growth trajectory, boost domestic production and ease supply chain constraints.
“The predictions are clear: We must pass the Build Back Better Act to create quality U.S. jobs, drive transformative growth in solar and storage, and overcome supply chain bottlenecks,” said SEIA President and CEO Abigail Ross Hopper. “This legislation will help triple U.S. solar capacity over the next five years and offset an additional 83 million tons of carbon. Conversely, headwinds from trade and the supply chain will cause a significant decline in installations next year at a time when increased solar adoption is critical to tackling the climate crisis. This makes the domestic manufacturing provisions of the Build Back Better Act even more important for the future health of U.S. industry.”
Rising prices have the most impact on the utility-scale solar market. Prices in this segment fell 12% between Q1 2019 and Q1 2021, but spikes in the past six months have wiped out any price declines from this two-year period.
When the Build Back Better Act goes into effect, the United States is expected to install 43.5 GW of additional solar capacity between 2022 and 2026 over the baseline forecast. This would bring cumulative solar capacity in the United States to more than 300 GW, which is three times the amount of solar energy deployed today.
“The US solar market has never seen so many opposing dynamics,” said Michelle Davis, chief analyst at Wood Mackenzie and lead author of the report. “On the one hand, supply chain constraints continue to escalate, putting gigawatts of projects at risk. On the other hand, the Build Back Better Act would be a major market stimulus for this industry, providing long-term assurance of continued growth.”
Forecasts show that tax cuts in the Build Back Better Act will boost growth in emerging solar markets in the state and significantly increase deployment in more established markets. For example, if the Build Back Better Act is passed, Texas is expected to add 7 GW of additional solar capacity by 2026 over the base forecast, reaching 44 GW of cumulative capacity.
If the Build Back Better Act becomes law, 14 states will see an increase of at least 1 GW in solar deployment over the next five years, and 14 others will see an increase of at least 500 MW.
- Solar energy 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, indicating that one in 600 homeowners in the US installs solar every quarter. Residential solar companies have outperformed in the face of recent price increases, but a tight supply of modules could affect future installations.
- Commercial and community solar were down 10% and 21% quarter on quarter, respectively. Major markets for these segments continue to experience interconnection and equipment delays.
- Due to supply chain constraints and logistical challenges, Wood Mackenzie has cut its solar forecast for 2022 by 25%, down from 7.4 GW.
- Installation costs increased for the second consecutive quarter in all market segments, reflecting supply chain challenges. In every segment except residential, year-on-year price increases were the highest since 2014, when Wood Mackenzie began tracking price data.
News item from SEIA