The U.S. solar industry is set to be torn between huge opportunities and major stumbling blocks in the coming months and years, and it will likely see a wild "solar coaster" ride in the next few years, Wood Mackenzie said on Tuesday.
Supply chain setbacks and constraints could delay many projects and put gigawatts of capacity additions at risk, Michelle Davis, Principal Analyst, Solar, at WoodMac, says.
But on the other hand, if Congress passes President Joe Biden's Build Back Better Act, the U.S. solar industry will receive a shot in the arm with the multiple clean energy incentives set in the legislation, including an extension of the investment tax credit (ITC), Davis added.
Due to the opposing bullish and bearish dynamics, near-term U.S. solar capacity is set for the largest fluctuations since 2016, when the investment tax credit almost expired, WoodMac's analyst noted.
"It's the solar coaster like we've never seen it before," Davis wrote.
Solar installations next year would be lower than previously expected due to supply chain constraints and rising prices, Wood Mackenzie reckons.
Utility-scale solar will be hit the hardest, the energy consultancy said, lowering its 2022 utility-scale outlook by 7.5 GWdc, or by 33 percent compared to last quarter's outlook.
On the other hand, if Congress passes the Build Back Better Act, America would see an estimated 43.5 GWdc of additional solar capacity installed over the next five years, which is a 31-percent increase compared to the WoodMac's base-case outlook.
The quarterly Solar Market Insight Report 2021 Q4 by the Solar Energy Industries Association (SEIA) and Wood Mackenzie showed on Tuesday that the U.S. solar market installed 5.4 GWdc of solar capacity in the third quarter, up by 33 percent from the same period of 2020 and the largest Q3 on record. However, costs continued to rise.
"Installed costs increased across all market segments for the second quarter in a row, reflecting supply chain challenges. In every segment besides residential, year-over-year price increases were the highest they've been since 2014 when Wood Mackenzie began tracking pricing data," the report said.
By Tsvetana Paraskova for Oilprice.com
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