- In the second quarter, large-scale solar power prices rose 6% year-on-year, according to a US Solar Market Insight report released Tuesday by Wood Mackenzie and the Solar Energy Industries Association (SEIA).
- According to Michelle Davis, senior analyst at Wood Mackenzie Power & Renewables and lead author of the report, supply chain constraints, rising shipping costs and rising prices of key commodities such as steel seem to be the main factors behind the price increase.
- Prices will likely remain high until the end of 2021, Davis said, but are expected to return to their decade-long downtrend sometime in 2022.
Solar installers are still feeling the effects of COVID-19 almost a year after the industry appears to come out of global shutdowns unscathed, the latest US Solar Market Insight report suggests.
Several months of rising prices for commodities, shipping and other staples have forced solar developers from all segments of the industry to raise their own prices in the second quarter of 2021, the costs of the utility-scale solar power increasing 6% year-over-year, according to Mackenzie Woods. While limited supplies have not led to project cancellations, Davis said, developers have been forced to delay projects or renegotiate ongoing contracts to complete installations this year.
“What is happening today is that the developers are fighting very hard right now not to lose money on their projects,” said Davis.
Small businesses have been particularly affected, according to SEIA CEO Abigail Ross Hopper.
“While most companies have enough inventory to keep price increases from affecting projects this year, small businesses and others with less inventory are feeling the impacts now and are tightening their belts,” a- she said in a statement. “If prices remain high or increase, these effects will be felt by most industry players by the start of 2022.”
After that, Davis said, prices are expected to start returning to pre-COVID standards as production and shipping of commodities stabilize. It is unlikely, she said, that any action or policy could help speed up this process and bring prices down sooner. However, she said extending existing tariffs, or imposing new spending, could jeopardize the currently expected recovery, and SEIA noted in a press release accompanying the report that two new tariff petitions have been filed.
“New trade restrictions could exacerbate price hikes and hamper solar development in the United States,” said Ross Hopper. “The last thing we should do is implement policies that increase costs, such as tariffs.”
Achieving the DOE’s recently announced goal of dramatically increasing solar deployments, Davis said, will require thinking about global supply chain issues in a systemic fashion.
“It’s important to have national supply chains, but we also need to make sure that developers have as many options as possible, which depends on how the trade policy looks,” she said. . “To achieve these goals, we will need all of these.”