Solar costs jump in 2021, reversing years of falling prices
Solar panels in the Indian state of Karnataka.
Jonah Gratzer | light flare | Getty Images
Falling costs have been a key driver of solar power adoption, but in 2021 prices have surged as big economic challenges – including supply chain constraints – hit the industry.
In parts of the solar industry, prices rose 18% last year, according to a report released Thursday by the Solar Energy Industries Association and Wood Mackenzie.
It was the first year that prices had risen in all three markets – residential, commercial and utility scale – since 2014, when Wood Mackenzie started tracking the data.
Apart from supply chain bottlenecks, trade actions and political uncertainty have also weighed on the sector, according to the report.
Still, the solar industry installed a record 23.6 gigawatts of new capacity in 2021, a 19% increase over 2020 levels. Texas added the most solar during the year , overtaking California for the first time.
On the residential front, installs jumped 30% year-over-year, hitting a new all-time high above 500,000.
The utility side added 17 gigawatts of new capacity, also a record. But the facilities were ultimately lower than expected. A third of large-scale projects scheduled for completion in the fourth quarter were delayed by at least a quarter. In addition, 13% of projects scheduled for completion this year have been delayed for a year or more, or canceled altogether.
Quarter-over-quarter and year-over-year price increases began to appear in the second quarter of 2021 and plagued the industry for the rest of the year.
Analysts say it could get worse before you turn a corner.
“Last year’s supply chain constraints will hit 2022 facilities the hardest, reducing capacity by 7% from 2021,” said Michelle Davis, principal analyst at Wood Mackenzie and lead author of the report. . “But our forecast demonstrates that long-term growth will eclipse these near-term challenges, especially if federal clean energy incentives are enacted.”
Davis said if the investment tax credit is passed, installed solar capacity will grow sixfold by 2032. The ITC is a key solar grant that was included in the president’s Build Back Better plan. Joe Biden.
On the other hand, the report says that without policy action, the US will only achieve 39% of what is needed to meet Biden’s 2035 decarbonization goal.
The report comes amid a resurgence in the energy security conversation following Russia’s war on Ukraine. Opinions differ on where to go next – some say oil and gas production needs to be accelerated, while others believe high hydrocarbon prices should accelerate the energy transition. Still others say that a global position must be adopted in terms of energy sources.
“In the face of global supply uncertainty, we must increase clean energy generation and eliminate our dependence on hostile countries for our energy needs,” said SEIA CEO and President Abigail Ross Hopper. . “Policymakers have the answers in front of their eyes,” she said, referring to the ITC move and investment in manufacturing.
“America’s energy independence hinges on our ability to deploy solar power, and the opportunity before us has never been more obvious or urgent,” she added.