US solar market records huge loss despite successful first quarter

The negative impacts of COVID-19 on the US solar market have strongly been felt in the second quarter of 2020, according to a new report released by Wood Mackenzie and the Solar Energy Industries Association (SEIA).

This is due to a handful of states implementing lockdown restrictions at the end of the first quarter limiting the impact of the pandemic on installations during the period.

The US solar industry set a new record in the first quarter of 2020 by achieving 3.6 GW of new capacity. This marked a 40% increase in energy generation additions in the US.

However, due to lockdown restrictions, construction was delayed in the second quarter and customer demand declined, causing changes in sales strategies and challenging access to financing.

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Abigail Ross Hopper, the CEO of SEIA, said: “The solar industry has certainly been impacted by the pandemic, resulting in uncertainty for businesses and 65,000 Americans out of a job, per most recent SEIA survey40.

“Our industry remains one of the fastest-growing industries in the country, and with simple policy action now, we are ready to lead our economic recovery and provide new hope for out of work Americans in the second half of this year.”

The market is expected to rebound during the second half of 2020.

Despite the anticipated recovery, SEIA and Wood Mackenzie predict 25% and 38% decreases in year-over-year installation volumes within the residential and non-residential markets, respectively.

The market for distributed solar is expected to be the most disrupted with up to 32% decrease in solar installations throughout 2020 compared to before the pandemic.

Austin Perea, senior research analyst and lead author of the report: “State-level quarantine orders have severely hampered sales, permitting, and construction of projects in the near-term, while an expected decline in consumer spending and sentiment will also dampen the outlook for the remainder of the year as the recession takes hold.”

Overall, however, Wood Mackenzie forecasts 33% growth in 2020, owing entirely to the strong performance of the utility-scale segment, which is expected to account for more than 14 GW of new installations.

Record utility-scale procurement totals in 2019 and Q1 2020 were the result of a growing project pipeline which positioned the segment for a record year, even as large-scale projects face some construction delays and challenges in financing and developing early-stage projects.

Ravi Manghani, Head of Solar at Wood Mackenzie, said: “While the utility segment shows promise with sustained levels of procurement so far, lower energy demand due to productivity loss and wholesale electricity market price drops will add to the uncertainty.

“All in all, the pandemic and the ensuing economic slowdown will weigh heavily on the solar industry in the coming months if the economy is slow to recover and financing dries up.”

Beyond 2020, all market segments face considerable uncertainty caused by the pandemic, resulting in a downward revision of 3.6 GW to the 2020 – 2025 forecasts relative to last quarter.

Learn more about the report here.