Governors' Wind Energy Coalition

 The U.S. solar market installed more than 5 gigawatts of solar capacity in the first quarter of this year, representing a 46 percent jump over the first quarter of 2020 and the largest Q1 on record, according to a quarterly report this morning from the Solar Energy Industries Association. With those additions, the U.S. solar market has now surpassed 100 GW of installed capacity, doubling the size of the industry over the last 3.5 years, and SEIA expects another 160 GW of capacity will be installed between this year and 2026.

But the report also notes that broader supply chain constraints have hit the solar industry. While average solar system prices remained relatively stable from the last quarter of 2020 to the first quarter of this year, components for solar equipment, including polysilicon, steel, aluminum and semiconductor chips, have become increasingly constrained. The report notes there’s nuance and varying impact for each component, but increasing demand for solar, combined with pandemic-related “macroeconomic realities,” like increased shipping costs, have led to higher commodity prices and delivery delays.

Steel costs, for one, have more than doubled since the pandemic began, leading to increased prices and lowered availability of solar racking equipment and trackers. Polysilicon supply and demand are “barely balanced,” so small production errors can have an outsized difference and in turn have led to stagnant or increasing module costs. The “most significant impact” of the current environment, however, is on utility-scale projects that are under development, the report said. Developers are approaching offtakers to renegotiate their power purchase agreements to increase prices or relax online deadlines.

“In a lot of ways that experience that we’re having right now, it illustrates the need to really make some investments here in the U.S. on the domestic manufacturing side,” Abigail Ross Hopper, SEIA’s president and CEO, told ME. “We obviously have a whole agenda on domestic manufacturing and see onshoring of some of that capacity as a way to mitigate some of the risks that we’re talking about.”