US solar projects continue to underperform in 2021 compared to P50 valuations, "missing performance expectations."
Solar project insurer kWh Analytics has released its annual Solar Generation Index (SGI) for 2022, which compiles information on more than 500 solar projects in operation in the United States with a total installed capacity of more than 11GW.
The SGI 2022 analysis reflects the weather-adjusted performance of solar projects from 2012 to 2021. The analysis concluded that solar projects will continue to underperform in 2021. Over the past decade, poor performance has impacted projects regardless of capacity, area and installation type.
This year's analysis continues to show that new projects are performing worse relative to P50 valuations than those built in early 2010. However, the average performance of construction projects in 2021 improved slightly compared to 2020.
The performance of solar projects built after 2015 has improved compared to last year and 2020, nonetheless, in the first year of operation, these projects are 7-13% away from the P50 valuation, and in the following years, there is almost no improve.
The poor performance of solar projects has nothing to do with when they started operating or their size. The projects are divided into three groups (1-10MW, 10-50MW and over 50MW). Analysis shows that they continue to underperform regardless of size.
Meanwhile, larger capacity (>50MW) projects have underperformed relative to their P50 valuations since 2019 compared to 10-50MW projects, with a slight increase in 2021 compared to the previous year.
SGI's presentation of project performance is based on different installation types, according to kWh Analytics data. In recent developments, single-axis trackers have been favored over fixed-tilt systems, but both have experienced similar steady declines in performance. From 2015 to last year, fixed-tilt systems performed better, but in 2021, both types converged at 92% of the P50 estimate.
Additionally, the underperformance trend remains a national issue, with average lifetime performance across the U.S. ranging from 5-10% below initial P50 estimates, with the exception of the Northwest and Southeast regions in 2021, which improved 1% and 2%.
The analysis by kWh Analytics concludes that the gap between P50 estimates and actual performance continues to widen, so solutions to underperformance of solar projects must be found to ensure the financial stability of the industry.
“Poor performance affects investors and lenders who are critical to the success and growth of solar projects,” said Jason Kaminksy, CEO of kWh Analytics.
"As an industry, we must work together to find ways to correct it and ensure the long-term financial health of the industry."