US solar prices have increased 18 percent due to supply chain challenges, trade actions, and legislative uncertainty, according to the US Solar Market Insight 2021 Year in Review report.
A third of all utility-scale solar capacity scheduled for completion in Q4 2021 was delayed by at least a quarter and 13 percent of capacity scheduled for completion in 2022 has either been delayed by a year or more or cancelled outright, according to the report released today by the Solar Energy Industries Association (SEIA) and Wood Mackenzie.
Over the last six months, Wood Mackenzie has decreased near-term solar forecasts by 11 gigawatts (GW), or 19 percent, due in large part to continued supply chain constraints, price increases, and interconnection challenges.
“In the face of global supply uncertainty, we must ramp up clean energy production and eliminate our reliance on hostile nations for our energy needs,” said SEIA CEO and president Abigail Ross Hopper.
“Policymakers have the answers right in front of them: if we pass a long-term extension of the solar Investment Tax Credit (ITC) and invest in US manufacturing, solar installations will increase by 66 percent over the next decade, and our nation will be safer because of it.
New 10-year forecasts from Wood Mackenzie show that passing a long-term extension of the solar ITC, new manufacturing tax credits, and other clean energy incentives would increase solar installations by 66 percent over the next decade compared to baseline projections.
In addition, if the manufacturing tax credits move forward, the industry could unlock nearly 20 GW of new domestic solar manufacturing capacity.
Under an ITC extension scenario, 10-year forecasts for the residential, non-residential (commercial and community solar), and utility-scale solar sectors would increase by 20 percent, 15 percent, and 86 percent, respectively.
Solar capacity additions by 2030 would exceed 70 GW annually under this scenario.
Without policy action in Congress, Wood Mackenzie projects that US solar capacity would only reach 39 percent of what’s needed to hit President Biden’s 2035 decarbonisation target.
“The supply chain constraints of the last year will hit 2022 installations the hardest, reducing capacity by 7 percent compared to 2021,” said Michelle Davis, principal analyst at Wood Mackenzie and lead author of the report. “In our ITC extension scenario, installed solar capacity is expected to multiply six times by 2032.”
The residential market saw 30 percent year over year growth with over 500,000 US homeowners installing solar, helping the industry reach 23.6 GW of new installed solar capacity.
The residential solar market’s momentum could slow as policymakers in California and Florida consider new programs that would reduce compensation in their net metering programs.
Wood Mackenzie’s forecasts account for California’s December NEM 3.0 proposal to demonstrate its impacts.
If the net metering proposal moves forward, the California residential solar market is expected to be cut in half by 2024.
Key Figures
Solar accounted for 46 percent of all new electricity-generating capacity added in the US in 2021. This represents the third year in a row that solar has made up the largest share of new generating capacity in the US.
Residential solar installations totaled 4.2 GW in 2021, a 30 percent year-over-year growth.
Community solar volumes reached 957 MW, representing 7 percent year-over-year growth, while commercial solar volumes in 2021 were nearly equal to 2020 at 1,435 MW. Project delays from interconnection challenges and supply chain constraints limited growth in both sectors.
17 GW of utility scale capacity were installed in 2021, about 3 GW less than expected due to supply chain constraints, logistics challenges, and trade headwinds. In Q4 alone, more than a third of all capacity expected to come online was delayed to 2022 or later.
Year-over-year price increases for utility-scale solar reached 18 percent for fixed-tilt projects and 14.2 percent for single-axis tracking projects in Q4.