Energize Weekly, December 23, 2020
The U.S. solar industry – led by utility-scale projects – rebounded in the third quarter from its midyear pandemic doldrums, according to an industry market report by consultant Wood Mackenzie and the Solar Energy Industries Association (SEIA).
Solar’s performance is part of a broader trend showing the strong performance of renewable generation in the face of the pandemic caused by the COVID-19 virus, energy analysts said.
The International Energy Agency (IEA) is projecting a 7 percent growth in renewable electricity generation in 2020 even as demand for power declines 2 percent and coal, natural gas and nuclear generation decline.
“Long-term contracts, priority access to the grid and sustained installation of new plants are all underpinning strong growth in renewable electricity production,” the agency said.
After a 7 percent year-on-year decline in global capital investment in renewables in 2020, renewable spending is expected to bounce back in 2021, rising 8.5 percent to $255 billion according to IHS Markit Energy Advisory Service.
“When it comes to renewables, we may likely look back on 2020 not so much for the COVID-induced contraction in spending but for the sprightly return to growth,” Roger Diwan, IHS Markit vice president, said in a statement.
In the U.S. overall, photovoltaic (PV) solar installations were up 9 percent in the third quarter at 3.8 gigawatts (GW) compared to the second quarter – large-scale projects accounted for 70 percent of the installation capacity, the Wood Mackenzie-SEIA market report said.
“The pandemic has no doubt created greater financial risk and precarious market conditions for developers, but the utility solar market has been able to weather these uncertainties so far and has continued to expand,” the report said.
There was a sharp drop in residential and commercial installation in the second quarter due to the pandemic, but utility projects continued a pace, and a record 11 GW of new solar capacity was installed through the third quarter – putting 2020 in position to be the third-largest year ever for PV installations.
Solar accounted for 43 percent of all new electricity generating capacity added in the U.S. through the third quarter, besting all other generation technologies.
Residential installations saw their sharpest quarterly decline ever in the second quarter as shelter-in-place orders hampered sales and installs. The sector was up 14 percent in the third quarter compared to the previous quarter, with 738 megawatts installed.
Several states saw large swings from decline to recovery. California, the country’s largest residential market, was hit with a 23 percent decline in the second quarter and then saw a 15 percent increase in the third quarter.
New York, which had the strictest lockdowns, saw installations plummet 73 percent in the second quarter and soar 153 percent in the third.
“Markets like Arizona and Texas that put much less restrictive lockdown measures in place decreased slightly in the second quarter but each surpassed their first quarter volumes in the third quarter,” the report said.
Texas’ quarter-on-quarter swing was down 11 percent and then up 22 percent. In Arizona, it was down 9 percent and then up 12 percent.
Non-residential installation recovered 8 percent in the third quarter, but were still down 13 percent compared to the third quarter of 2019.
Prospects for 2021 look good as a total of 9.5 GW of new utility-solar power purchase agreements were announced in third quarter 2020, bringing the contracted pipeline to a record total of 69 GW.
“This report points to the incredible resilience of our companies and workers in the face of the pandemic and continued demand for clean, affordable electricity sources,”Abigail Ross Hopper, SEIA president and CEO, said in a statement. “It also speaks to our ability to support economic growth, even in our darkest moments.”
The IEA in its December electricity market report is also projecting renewable generation, particularly wind and solar, to set records in 2021, increasing its market share to 29 percent, a 1 percent increase over 2020.
IHS Markit forecasts that PV solar will continue to account for about 54 percent – nearly $700 billion – of global renewable investments and capacity additions between 2021 and 2025.
Investments in wind overall are slowing. Offshore wind investment is forecast by IHS Markit to be $320 billion for 2021-2025, down from the almost $365 billion spent between 2015 and 2019.
Spending on renewables is projected to be about $255 billion a year over the next five years – a 9 percent increase in spending compared to the last five-year period.
“There is a chance that this new surge in capital spending for renewables could still exceed expectations,” Diwan said. “Countries and companies are accelerating their renewables ambitions, often anchored in net-zero emission targets, and a number of key countries are likely to focus post-COVID crisis spending on new green initiatives.”
