Solar energy prices increased across all segments in second quarter
The price of solar energy increased in every market in the second quarter, marking the first time that has happened since 2014, according to a new report from the Solar Energy Industries Association (SEIA) and Wood Mackenzie.
Prices in the utility scale segment increased the most, jumping 6 percent in the quarter compared to the second quarter of 2020. The major reason for the increase is supply chain constraints, according to the U.S. Solar Market Insight report. SEIA and Wood Mackenzie began tracking this data in 2014.
“This is a critical moment for our climate future but price increases, supply chain disruptions and a series of trade risks are threatening our ability to decarbonize the electric grid,” SEIA President and CEO Abigail Ross Hopper said. “If we want to incentivize domestic manufacturing and drive enough solar deployment to tackle the climate crisis, we must see action from our federal leaders.”
The report said recent enforcement actions on Xinjiang metallurgical grade silicon, along with two new tariff petitions, could further exacerbate supply chain constraints and increase solar system prices.
Overall, the industry is growing as the solar industry accounted for 56 percent of all new U.S. electric capacity additions in the first half of 2021. The U.S. officially surpassed 3 million solar installations in the second quarter, driven by a strong recovery in the residential sector. Residential solar was up 2 percent over the first quarter and 46 percent from the second quarter of 2020 when installations were limited by the COVID-19 pandemic.
“The solar industry continues to demonstrate strong quarterly growth, and demand is high across every segment,” Michelle Davis, principal analyst at Wood Mackenzie and lead author of the report, said. “But the industry is now bumping up against multiple challenges, from elevated equipment prices to complex interconnection processes. Addressing these challenges will be critical to expanding the industry’s growth and meeting clean energy targets.”
Wood Mackenzie forecasts that the U.S. will average just over 29 gigawatts (GW) of new annual solar capacity additions through 2026. However, this rate is not high enough to reach President Joe Biden’s 2035 clean energy targets. The solar industry must install more than 80 GW of solar annually from 2022 through 2035 to reach that goal.
Among other stats in the report, community solar was up 16 percent over last year’s quarter with 177 MWdc installed, while commercial solar was up 31 percent with 354 MWdc installed. Also, utility-scale solar set another record for second-quarter installations at 4.2 GWdc. Texas, Arizona, and Florida accounted for nearly 3 GW of the quarterly total.