Clear to partly cloudy. Low near 55F. Winds light and variable..
Clear to partly cloudy. Low near 55F. Winds light and variable.
The National Renewable Energy Laboratory (NREL) compiles and presents a comprehensive summary of key technical trends within the solar industry to the organization’s solar office staff each quarter. The quarterly Solar Industry Update includes global and U.S. supply and demand, module and system pricing, investment trends and business models, and updates on U.S. government programs supporting the solar industry.
This article provides a high-level overview of the core elements included in the Spring 2022 Solar Industry Update and concludes with additional contextual information regarding the solar industry.
Over the last decade, global photovoltaic (PV) - aka solar - capacity additions increased from 17 gigawatts direct current (GWdc) to 172 GWdc. Toward the end of 2021, PV installations reached 939 GWdc. Global PV installations are projected to increase over the next four years, specifically in the United States, Europe, India, and especially China, where solar accounted for 30% of new generation capacity.
Renewable energy, particularly PV, is becoming increasingly important to the United States' energy portfolio. In 2010, PV represented a mere 4% of the U.S.'s new electric generation capacity. By 2017, PV represented approximately 35% of new capacity and increased to 44% in 2021.
Combined with wind, which represented 33% of added capacity, renewables accounted for 77% of all new capacity in 2021.
Despite installing approximately 18.6 gigawatts-AC (GWac) of PV in 2021, energy generation from coal trended upward for the first time in years in the United States. The Energy Information Administration (EIA) attributes the increase in coal to natural gas prices, skyrocketing energy demand, and relatively stable coal prices.
Over the last seven years, PV system pricing has trended downward while the average system size has increased. According to data gathered from 166 PV projects owned by 25 regulated utilities across numerous states, including Arizona, California, Connecticut, Massachusetts, and New York, the average system price in 2021 was $1.20/Wac, an 11% decrease from the previous year. EnergySage, a solar energy company in Boston, Massachusetts, reported a 2.5% decrease in the average price of residential PV systems between H2 2020 and H2 2021. However, the price increased for the first time between H1 and H2 2021.
Global PV shipments increased by 47% in 2021, amounting to 194 GW. Notably, production in the United States set a record of 4.8 GW of PV modules (commonly known as solar panels), an 11% increase year-over-year. The top 10 manufacturers increased their market share from 71% to 77%, primarily fueled by crystalline silicon (c-Si) production. For context, monocrystalline silicon is the most common silicon-based material employed in photovoltaic cell production. Mono c-Si technology has gained traction in recent years, accounting for 35% of PV shipments in 2015 and 95% of shipments in 2021.
In November, the spot price of polysilicon climbed above $37/kg—its highest mark in 10 years—before dropping to around $32/kg by the end of the year. Polysilicon is a high-purity form of silicon and a key raw material in the PV supply chain. Increased demand from wafer makers and polysilicon factory production helped the price rise 6% to $34/kg during the first quarter of 2022. A wafer or a solar wafer is a circular disk of high purity silicon material fundamental to photovoltaic power generation.
Solar stocks experienced a downward trend in 2021, which continued into the first two months of 2022, with Invesco Solar ETF dropping as much as 24%. However, the stock soon rebounded and rose 18% as a result of Russia's invasion of Ukraine, which has negatively impacted the global energy market and increased demand for renewable energy investments.
PV Imports into the United States in the last six months mirrored the volatility displayed in the first half of 2020. In 2021, module imports in the U.S. decreased, whereas PV cell imports grew by 17%.
President Biden extended Section 201 tariffs on crystalline silicon modules and cells by another four years after receiving a recommendation from the United States International Trade Commission (USITC). In part, the tariffs are intended to help increase solar manufacturing in the U.S. However, bifacial modules, which produce solar energy from solar cells on both sides of the panel, are exempt from the tariffs and may play a larger role in the U.S. utility-scale market.
Though 77% of all c-Si imports to the United States are attributed to Malaysia, Vietnam, Thailand, and Cambodia, the Office of the U.S. Trade Representative (USTR) is now authorized to negotiate an agreement with Mexico and Canada. Future agreements with the adjacent countries could lead to future PV cells and module imports without tariffs.
A PDF of the full report can be downloaded from the National Renewable Energy Laboratory's website.
According to solar industry research data provided by the Solar Energy Industries Association (SEIA), solar is an economic engine in the United States, employing more than 230,000 American workers across 10,000 companies. Historically, California and Texas have dominated the U.S. solar market, but demand for solar has increased across the national market. Notable regions include the Northeast, such as Rhode Island, where the adoption and development of renewable energy projects have been propelled by Green Development LLC, a prominent developer of large-scale renewable energy projects.
Though political hurdles remain to advance renewable energy projects in the U.S. further, increased interest among the public, and especially the private sector, points to increased growth. In 2021, solar increased its share of total U.S. electrical generation, accounting for 46% of all new electric capacity added to the energy grid, with private investments amounting to $33 billion.
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