Solar’s worrying inflation

Source: BY MATTHEW CHOI, Politico • Posted: Thursday, March 10, 2022

U.S. solar prices for utility-scale fixed-tilt projects increased up to 18 percent last year amid supply chain constraints and legislative and trade uncertainty, according to a new report released today by the Solar Energy Industries Association and Wood Mackenzie. While the industry still posted a record-breaking year for installed capacity, the new findings underscore industry calls to pass the clean energy tax provisions in the stalled Build Back Better legislation to achieve the Biden administration’s climate and manufacturing goals.

Last year marked the first year that solar system prices increased consistently year-over-year and quarter-over-quarter for every segment beginning in the second quarter, the report said.

Shawn Rumery, SEIA’s senior director of research, told ME the price increases largely stem from materials costs, which are increasing due to supply chain challenges. “We’ve been issuing this report now for almost 12 years and never in the report’s history have we seen the kind of sustained quarter-over-quarter price increases that we have seen for three consecutive quarters,” he said.

Provisions in the BBB, including investment tax credit extension would be “a major catalyst for the industry,” the report said, and likely increase capacity installations over the next decade by 66 percent. While the solar industry is expected to more than triple by 2032, without passage of the provisions it is expected to fall far short of what is needed to hit the Biden administration’s 2035 decarbonization targets.

In order to be on pace to hit that 2035 target, the industry would need to hit about 900 gigawatts by the end of the decade, Rumery said. “Under a baseline situation without the clean energy provisions of BBB, we’re only going to get to about half of that, which is extremely problematic,” he added.

The industry is also warning of the impacts from potential trade action looming this month. California-based Auxin Solar recently petitioned the Commerce Department , arguing that solar cells and modules imported from Malaysia, Thailand, Cambodia and Vietnam should be covered by tariffs that hit imports from China. Utilities and renewable energy groups have strongly urged Commerce to reject the request, but SEIA’s report said applying the China antidumping and countervailing duties could more than double the cost of imported modules, the majority of which come from the nations targeted by the request.