Recently, research institute Wood Mackenzie released the latest forecast for US solar energy.
Previously, the Biden administration issued an executive order (EO) announcing that the Commerce Department would delay the imposition of anti-dumping/anti-circumvention (AD/CVD) tariffs for two years. Given the uncertainty surrounding an anti-circumvention investigation launched by the U.S. Department of Commerce in March, WoodMac had forecast a 6.3GW reduction in installed capacity in 2022.
The two-year tariff moratorium is expected to give the solar industry a breather, but WoodMac said segments have been affected differently.
Large ground photovoltaic power station
About 85 percent of most large U.S. ground-based power projects rely on components imported from the four countries under investigation for anti-circumvention. With most of the supply going to the U.S. market, when the investigation began, module makers significantly reduced capacity in Southeast Asia. Some large manufacturers have restarted production due to the executive order.
Some suppliers expect to ship components to the U.S. as early as the end of the third quarter. While EO brings some certainty to the issue of new tariffs on AD/CVD, the industry is currently facing uncertainty over the implementation of the Uyghur Forced Labor Protection Act (UFLPA). Implementation of this new law could severely restrict U.S. component imports.
On the demand side, developers say that despite the two-year moratorium, tax equity investors still see potential tariff implementation as a risk. With solar project financing still considered high-risk, developers will continue to face high capital costs and tough barriers to entry until the Commerce Department announces a final decision, WoodMac said.
The impact of the survey has grown exponentially. Weeks of inactivity have led to months of delays. EPC companies have begun to reallocate machines and people to non-energy projects, leading to a heightened labor shortage on recent projects. With a large number of projects already delayed to 2023 or later, the possibility of renegotiating contracts and setting project dates to 2022 is low.
Taking into account the potential for available components and contract renegotiations, WoodMac expects 30-40% of projects delayed to 2023 and 2024 to land earlier.
Taking all of the above into account, WoodMac expects only a modest 1.5GW (17%) upside for large-scale ground-mounted solar projects in 2022, with a slightly larger 3GW (18%) upside potential in 2023.
Industrial and commercial projects
Similar to large-scale terrestrial solar, the majority of commercial solar module supply comes from the four Southeast Asian countries under anti-dumping/countervailing investigations. EO will ensure developers get components for the rest of the year.
Some of these components may enter the program in 2022, but it is more likely that the components shipped during the rest of the year will be part of the grid-connected program in 2023.
As a result, WoodMac expects modest upside (~100MW) in 2022 and larger upside (~500MW) in 2023 as delayed projects come online.
Changes in the competitive landscape of residential solar energy
The biggest impact of EO on residential solar is in the changing competitive landscape. Before the EO, WoodMac expected that small local installers without established equipment supplier relationships would find it difficult for them to acquire equipment during the AD/CVD investigation.
The needs of these installers will be met by larger installers. Due to continued strong residential solar demand, WoodMac expects the survey to have a very small impact, far less than the recent delay in California's Net Electricity Metering (NEM) program.
Therefore, EO has not changed WoodMac's view on residential solar projects. However, EO does mean that small local installers will do better in the coming months.