Report: U.S. solar shrugged off pandemic, enjoyed 2020 boom

Source: By John Fialka, E&E News reporter • Posted: Tuesday, December 15, 2020

Multiple market forces pushed up U.S. demand for solar energy in late summer and early fall this year, more than offsetting an earlier slowdown attributed to the impacts of COVID-19.

Solar energy sales, led by utility-scale projects, have accounted for 43% of all new electric generating capacity this year and are now seen as likely to lead to a record annual volume for sales.

All of this took shape before Democrat Joe Biden was elected president, according to a report released today by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, a renewable energy analytical firm.

The report says the potential of continued expansion of state-level renewable energy targets as well as those by cities and major corporations has pushed utility-scale solar buyers to set their goals even higher. They see renewable energy as a hedge against possible legislative climate action at the federal, state or local level.

“This report points to the incredible resilience of our companies and workers in the face of the pandemic and continued demand for clean, affordable electricity sources,” said Abigail Ross Hopper, SEIA’s president and CEO. “It also speaks to our ability to support economic growth, even in our darkest moments.”

While demand for residentially installed solar dropped earlier in the year due to delays caused by the stay-at-home restrictions of COVID-19, there was “growing evidence that outdoor construction projects like solar installations can be undertaken relatively safely while observing public health guidance.”

The report notes that installers of residential solar, such as rooftop solar arrays, responded in late summer by offering rebates and discounts, and banks arranged more favorable loans. The result was an abrupt turnaround in the third quarter of 2020, creating the highest growth in the residential market in the last four years.

“States with the biggest installation declines in [the second quarter] also had the biggest recoveries in Q3, such as New York and New Jersey where restrictions were substantial,” explained Michelle Davis, senior analyst at Wood Mackenzie.

Meanwhile, there was no slowdown for utility-scale solar farms because many electric utilities worried about a pending phaseout in the federal investment tax credit for solar projects by the end of 2023. They contracted for more solar, especially in states like California, Colorado and Washington that have already set carbon reduction targets.

The bullish market for large solar projects continued unimpeded despite COVID-19 and two disasters in silicon wafer-related manufacturing in China, the world’s leader in solar energy. An explosion in Xinjiang and flooding in Sichuan knocked out about 11% of the global capacity for making solar modules. Still, the global price for solar modules declined from the second to the third quarter, according to the report.

“The degree to which President-elect Biden’s administration can enact their climate and energy agenda over the next several years offers significant upside potential to this forecast,” the report concluded.

Aside from the expiring tax credit — which might be extended during a Biden administration — the biggest cloud on solar’s horizon, according to the two groups that wrote the report, might be a shortage of skilled labor to meet the accelerating demand.

“The industry has now returned to the labor shortages experienced in late 2019 and early 2020 prior to the pandemic,” the report noted.