SEIA, Wood Mackenzie Report Uncertain Solar Growth Due to Supply, Legislation Issues

According to the U.S. Solar Market Insight 2021 Year in Review report, U.S. prices for solar increased by as much as 18% in 2021 because of unprecedented supply chain challenges, trade action and legislative uncertainty. The U.S. Solar Market Insight 2021 Year in Review report. According to the report of the Solar Energy Industries Association, (SEIA), and Wood Mackenzie, which is a Verisk company, a third-quarter of all utility-scale solar capacities that were due for completion in Q4 2021 were delayed by at most a quarter. 13% of the 2022 capacity was either delayed by more than a year or cancelled outright. Wood Mackenzie’s near-term solar forecasts have decreased by 11 GW (or 19%) over the past six months. This is due to price increases, supply chain constraints, 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,” says Abigail Ross Hopper, SEIA’s CEO and president. “Policymakers have the answers right in front of them: if we pass a long-term extension of the solar Investment Tax Credit and invest in U.S. manufacturing, solar installations will increase by 66 percent over the next decade, and our nation will be safer because of it. America’s energy independence relies on our ability to deploy solar, and the opportunity before us has never been more obvious or urgent.”

Wood Mackenzie has released 10-year forecasts that show that a long-term extension to the solar Investment Tax Credit, new manufacturing tax credits, and other clean energy incentives would increase the number of solar installations by 66% compared with baseline projections. Additionally, the industry could unlock nearly twenty GW of new domestic manufacturing capacity if it moves forward with the manufacturing tax credit.

In an ITC extension scenario, 10-year projections for the residential, commercial and community solar and utility-scale solar sectors would rise by 20%, 15%, 86% and respectively by 20% and 15%, respectively. This scenario would see solar capacity increases of more than 70 GW per year by 2030.

Without policy action in Congress, Wood Mackenzie projects that U.S. solar capacity would only reach 39% of what’s needed to hit President Biden’s 2035 decarbonization target.

“The supply chain constraints of the last year will hit 2022 installations the hardest, reducing capacity by 7% compared to 2021,” observes Michelle Davis, principal analyst at Wood Mackenzie and lead author of the report. “But our forecasts demonstrate long-term growth will overshadow these short-term challenges, especially if federal clean energy incentives are passed. In our ITC extension scenario, installed solar capacity is expected to multiply six times by 2032.”

Despite these headwinds, solar demand remains strong. The residential market saw a 30% increase year-over year with more than 500,000 U.S. homeowners installing sunroofs, helping to reach 23.6 GW of installed solar capacity.

However, 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. The California residential solar market will be reduced by half if the net metering proposal is approved.

In 2021, solar accounted for 3.9% total U.S. electricity production. The 2021 total of residential solar installations was 4.2 GW, a 30% increase in year-overyear growth.

Community solar volumes reached 957MW, representing 7% growth year-over-year, while commercial solar volumes in 2020 were almost equal to 2020 at 1,435MW. Both sectors suffered from delays due to interconnection problems and supply chain constraints. 

17 GW of utility-scale capacity were installed in 2021. This was 3 GW less than anticipated due to trade headwinds, logistics challenges, supply chain constraints and logistics challenges. Over a third of the capacity that was expected to go online in Q4 was delayed until 2022 or later.

Year-over-year price rises for utility-scale solar reached 18% in fixed-tilt projects, and 14.2% in single-axis tracking projects during Q4.

The full report is available here.