Series of solar panels at the Toms River Solar Farm, built on the EPA Superfund site in Toms River, New Jersey, U.S., May 26, 2021.
Dane Rhys | Reuters
The US solar industry will grow 25% less than previously forecast in 2022 due to supply chain constraints and rising raw material costs, according to a report released on Wednesday. Three of the Solar Industry Association and Wood Mackenzie.
The quarterly update shows prices continuing to rise as the industry grapples with the same cost pressures impacting every corner of the economy. Additionally, trade uncertainty has also weighed on the solar industry.
In the third quarter, costs increased across the utility, commercial, and residential solar segments for one second quarter in a row. In the utility and commercial segments, the year-over-year price increase was the highest since Wood Mackenzie began tracking the data in 2014.
Utility-scale projects are particularly sensitive to these price spikes. Costs fell 12% between Q1 2019 and Q1 2021, but with the recent spike in the price of raw materials such as steel, the cost reductions of the previous two years have been erased.
In addition to general supply chain issues, solar shipments have been disrupted for months after an anonymous group filed a petition with the US Department of Commerce asking for tariffs to be extended to Thailand and Malaysia. and Vietnam. The petition was dismissed in November.
However, US installed capacity increased 33% year-over-year to 5.4 gigawatts, marking the most record addition in the three months from July to September. All told, the United States has a total generating capacity of about 1,200 gigawatts, according to the Public Electric Association.
Residential solar installations topped 1 GW in the third quarter, with more than 130,000 systems installed in a single quarter on record for the first time.
Utilities scale also set a record, with 3.8 GW installed during the quarter. However, not all solar arrays recorded growth during this period. Commercial and community solar deployments fell 10% and 21% QoQ, respectively, due to connectivity issues and equipment delivery delays.
While the industry is expected to grow less than previously forecast in 2022, the passage of the Build Back Better plan could spur future growth.
“The U.S. solar market has never experienced so much opposing dynamics,” said Michelle Davis, principal analyst at Wood Mackenzie. “On one hand, supply chain constraints continue to escalate, putting gigawatts of projects at risk. On the other hand, the Better Build Back Act will be a major market stimulant for the industry. , establishes long-term certainty of continued growth.”
If the bill is signed into law, Wood Mackenzie forecasts that the United States will install 43.5 GW more solar capacity than originally forecast between 2022 and 2026.
“This will bring cumulative solar capacity in the United States to more than 300 gigawatts, three times the amount of solar deployed today,” the report said.
The bill includes an extension of the Investment Tax Credit, which has been instrumental in the growth of the US solar industry.
