A YEAR OF CHANGES AND GROWTH
Twenty-Twenty has been a year like no other. It will be difficult for many to look back 12 months and recognize the same world we live in today. For many of us the rhythms of our daily lives have changed; we are even anticipating a new president.
And during this incredible time of change and struggle for so many, the solar market has not only shown its resilience, but solar is in a much stronger position than it was a year ago. After years of dramatically falling system prices, 2020 has shown solar can take an even bigger share of US and global power markets.
Solar has long been eating the lunch of coal and nuclear, but 2020 showed that solar and wind are increasingly replacing even gas. For the first nine months of the year the capacity of newly installed gas-fired power plants fell, and gas projects are now increasingly being cancelled in the interconnection queues of grid operators, to be replaced with solar and wind.
In fact, solar demand been so high this year that the global supply chain is having growing pains keeping up with demand. Shortages of polysilicon, glass, and the EVA used in module back sheets are driving up prices for these materials, and thus leading to an increase in the price of solar modules.
Further, Chinese solar manufacturers are putting pressure on the government to rapidly approve additional factories for raw materials and alleviate these shortages…but it’s a race between new capacity and new demand worldwide. The result as in any global market will be periods of shortage and periods of surplus. Long-term solar pricing will continue to trend downwards but for most of next year the outlook is for stable or rising costs for solar modules.
And it is not just solar that is booming. 2020 also saw breakout growth in the grid-tied battery market. As documented by Wood Mackenzie, after a record-breaking second quarter, battery installations skyrocketed even higher to 476 MW in the third quarter. The 2020 market promises to be double the size of the market in 2019.
The future isn’t even solar, wind, and gas anymore. It’s now solar, wind, and batteries.
Solar is doing so this despite changes in policy and inconsistent support. The ITC continues to phase down at the end of this year, but there is no sign of that stopping the solar market. The tariffs on imported solar modules have ended up being more of a speed bump than a roadblock, and even while they are still in place the solar market is gaining speed.
There is much more to do in the future, as solar and wind have the historic task of now only crowding out new fossil fuel investments, but increasingly replacing existing power plants. And in next month’s commentary, we will take a look at what these trends mean for 2021. For now, if only for a moment, we in the solar industry should look back and marvel at just how far we have come.