By nearly all measures, 2020 was a trying year. And though the solar industry will end the year with more stability than most sectors of the economy — Wood Mackenzie projects 43 percent growth this year — the year still sowed uncertainty and confusion within the industry.
Here are the top solar stories of 2020.
An ITC extension
After more than a year of lobbying, solar companies and renewables trade groups in late 2020 secured an extension of the industry’s treasured tax credits. A spending package President Trump signed before the New Year keeps the Investment Tax Credit at 26 percent through 2022 and at 22 percent through 2023, a policy similar to one the White House eliminated during spending negotiations at the same time last year.
The new legislation did not include every policy that members of the solar industry hoped for. But extending the credit that’s been the “single most successful policy on the books to deploy clean energy,” as Solar Energy Industries Association CEO Abigail Ross Hopper has described the ITC, will almost certainly equate to measurable upside for solar installations in coming years.
“As we think about this solar decade, this gets us a lot of the way there,” said Ross Hopper, referencing the group’s goal for solar to produce 20 percent of U.S. electricity by 2030 during an event the group hosted following the bill's passage by Congress.
The legislative package included funding for solar research and development and incentives for renewables development on public lands. But lawmakers left out a provision for “direct pay” of the tax credits, which would allow developers to take advantage of the credits even if a coronavirus-battered economy constrains tax equity.
Because many supportive renewables policies have grown out of state legislatures in recent years, the passage of federal tax credit extensions is all the more notable. Renewable portfolio standards and other subnational renewables incentives were comparatively subdued in 2020, as local governments coped with the coronavirus pandemic. Virginia passed its Clean Economy Act, which establishes carbon-free energy standards for the state’s largest utilities, at the beginning of the year. Arizona is also poised to require investor-owned utilities to reach 100 percent clean energy by 2050.
The 2020 election
Joe Biden’s win presents major upside for the solar industry. The candidate campaigned on a national plan to reach 100 percent clean electricity by 2035. Solar offers a key technology to achieve that goal, with 2020 marking its second year in a row to claim the largest share of new generating capacity of any resource.
Actually hitting that 2035 target is a formidable task, however. A Wood Mackenzie report released in December suggested executive action could boost renewables to 37 percent of electricity generation by 2030. Reaching 50 percent renewables would require nearly 300 gigawatts of large-scale solar additions in the next decade. In 2020, a year expected to hit a record for large-scale solar, the entire industry is likely to install just over 19 gigawatts, putting those goals out of reach unless the industry grows significantly.
Reaching higher levels of penetration will also require significant transmission build-out and policy actions from Congress. Biden has laid out a plan to spend $2 trillion on clean energy in his first term.
Biggest year ever for large-scale solar?
Despite the coronavirus pandemic, 2020 is set to hit a new high for utility-scale solar, beating out 2016 as the top year on record for big solar projects.
The past year has seen developers stumble through concerns about corporate solar demand, pinched tax equity due to the economic downturn, and some construction shutdowns and permitting delays tied to state coronavirus policies. Despite that, Wood Mackenzie expects the sector to end the year with more than 14 gigawatts of utility-scale projects completed.
The December extension of the Investment Tax Credit will almost certainly boost installations in the coming years as well. Prior to the extension, analysts at Wood Mackenzie expected a squeeze on the market in 2022 in response to the ITC stepdown, even though growth was expected to continue in the following year.
Alongside an overall record for the large-scale industry, this year also brought a milestone for project size in the U.S. Invenergy announced 1.3 gigawatts of solar planned for Texas, a now-booming solar market. Though Invenergy’s project will be built in phases, slightly undercutting its sheer size, the capacity is still eye-popping. The next biggest project planned in the U.S., Arevia Power and Quinbrook Infrastructure Partners’ Gemini, is 690 megawatts. That also got approval in 2020.
And the lows
About a year since the coronavirus struck the U.S., the pandemic’s impact on the solar industry now appears muted compared to the devastation it’s wrought on global health and other areas of the U.S. economy. However, the pandemic created severe difficulties for the solar industry in the spring and summer.
The residential sector experienced the greatest disruptions. In the spring, sales took a nosedive. SunPower cut executive salaries and work hours. Sungevity laid off hundreds of workers in March and auctioned its assets in December. Roofer and solar installer PetersenDean filed for Chapter 11 bankruptcy in June. In May, the Solar Energy Industries Association said the industry had lost 65,000 jobs, a number the group equated to five years of job additions.
As infections continued spiking, companies adjusted to coronavirus-related restrictions by shifting to virtual sales techniques and cutting prices. Earlier in the year, analysts at Wood Mackenzie expected the residential market to end 2020 with relatively flat installations. Now data suggests installations will grow 7 percent over last year.
For large-scale solar, shutdowns sowed some confusion about construction and delayed project development during the transition to online work. These conditions were most harmful to smaller developers, who will be the first edged out of the market if fears about constrained tax equity are realized.
Following U.S. solar tariff policy in 2020 was a whiplash-inducing experience. At the end of 2019, the U.S. Court of International Trade rebuked the Trump administration’s attempt to include two-sided solar panels in its Section 201 tariffs, after the administration had already given those panels an exclusion. In April, the U.S. Trade Representative tried to eliminate the bifacial exclusion again.
Throughout the year, the administration and plaintiffs including Invenergy and the Solar Energy Industries Association traded legal arguments concerning the exclusion. In October, the Trump administration threw a new tactic at the case: a presidential proclamation that withdrew the exclusion under new authority. So far, the court has upheld that move. As of November, the exclusion is out, meaning bifacial panels imported into the U.S. are subject to duties. But the drama isn’t over; plaintiffs are expected to file a new legal challenge. It will be litigation to watch for in 2021.
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