The US solar industry set a record for second-quarter installations with 5.7 GW DC added in the April-June 2021 period but is handicapped by price increases across all segments, according to a report released on Tuesday by the Solar Energy Industries Association (SEIA) and Wood Mackenzie.
Solar prices rose both quarter-over-quarter and year-over-year in every market segment for the first time since such data tracking began in 2014 as supply chain constraints and commodity price increases started to have an impact. According to the report, the issue is expected to have a more pronounced effect in 2022 as many developers have enough inventory for 2021 projects.
The solar industry is nevertheless forecast to keep setting annual installation records until the solar Investment Tax Credit fully phases down in 2024 under current law.
Wood Mackenzie has increased its outlook from 2021 to 2026 and projects that annual solar deployments will average just over 29 GW through 2026, with the warning that additional trade actions represent a downside risk to its outlooks.
“The solar industry continues to demonstrate strong quarterly growth, and demand is high across every segment,” said Michelle Davis, principal analyst at Wood Mackenzie and lead author of the report. “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,” Davis added.
The utility solar segment installed 4.23 GW, a record second-quarter figure, with Texas, Arizona and Florida together adding almost 3 GW. There were 9.3 GW of new utility-scale solar power purchase agreements (PPAs) signed, taking the project pipeline to a historic level of 85 GW.
The residential segment has experienced a recovery after it was hit by the COVID-19 pandemic. Residential solar installations totalled 974 MW, up 2% quarter-over-quarter and 46% year-over-year.
Community solar installations increased 16% from a year ago to 177 MW, while commercial solar increased 31% on the same basis to 354 MW.
In the first half of 2021, solar installations amounted to nearly 11 GW and accounted for 56% of all new electricity capacity additions in the country.
The total second-quarter solar additions were up 45% year-over-year and brought the US’ installed solar capacity to 108.7 GW DC.
Choose your newsletter by Renewables Now. Join for free!