Power Solar

Solar Power Could Boom in 2022, Depending on Supply Chains

2022 is shaping up to be a solar boom. That is, if supply chain constraints don’t undercut the industry. The U.S. Energy Information Administration projects U.S. solar companies will install 21.5 gigawatts of utility-scale capacity this year, shattering the annual record of 15.5 GW set last year. But EIA’s projection comes amid a period of considerable uncertainty…

projects U.S. solar companies will install 21.5 gigawatts of utility-scale capacity this year, shattering the annual record of 15.5 GW set last year.

However, the projections of EIA come amid considerable uncertainty in the industry. The Solar Energy Industries Association, a trade group, warned last month that supply chain constraints were driving cost increases and could limit the industry growth in 2022 (Climatewire, Dec. 14, 2021).

“Developers seem very pessimistic regarding their ability to complete projects they had slated 2022,”, said Sylvia Leyva Martinez. She tracks the North American utility solar industry for Wood Mackenzie.

These projections are made amid shipping delays, rising equipment costs, and other factors. Wood Mackenzie initially projected 22.5 GW of new solar capacity in 2022. But the consulting firm downgraded its estimate to 15 GW after conducting a survey last year with top developers, which found that almost a third of projects would be delayed.

Martinez stated that

Developers are increasingly involved in complex contract negotiations, including with potential buyers. Contrary to past contracts that were fixed in price, solar contracts today often have price hedges, collars, and other financial tools to reduce risks for buyers and developers.

The contracts are an answer to price increases due to pandemic-induced supply chains constraints, she stated.

” It was assumed that market conditions would prevail. But that is no longer the case,” she stated.

Some analysts believe that solar’s outlook is better for 2022. Tara Narayanan from BloombergNEF stated that the projections for 2022 were only slightly less conservative than EIA. Although she predicted that developers would overcome supply chain constraints and achieve record-setting installations this year, she acknowledged that delays are possible.

“Twenty-five GW or more is enormous,” Narayanan stated. The fact that you can get to these numbers, and could even say it could be bigger, should give you an idea of where the sector is heading .”

Indeed There was widespread consensus that the difficulties of solar are temporary. Martinez stated that developers will reap the benefits of improved purchasing strategies and increased manufacturing output to meet higher demand for solar panels.

Both Martinez and Narayanan said they expected annual installations of at least 20 GW in the coming years.

The projections reflect industry’s rapid growth over the past years. The Uni

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