“When something is important enough, you do it even if the odds are not in your favor.”
– Elon Musk
The road of solar has been an exciting path. Since I entered in 2005, solar has encountered many forks on the road in its growth. Events to test the industry’s value have confronted different aspects of its development. None of the previous show-stopping events slowed down the growth of solar. However, until recently, none have hurt the industry as much as the combination of COVID, the supply chain breakdown, the WRO’s intervention, and the anti-circumvention case, which have all led to price increases. So, where are the changes going to lead us?
In the last couple of years, getting projects done at a reasonable profit has become more complex. Job growth has helped the industry, but outside influences like anti-circumventing, logistics, increased materials prices, WRO over polysilicon origin, customs hold, and rejections have led to price increases instead of decreases.
It is time for the utilities to increase the price per kilowatt-hour they pay for PPA’s. We are in an industry where exceptional levels of achievement happen when we work together. However, the utilities must adjust to the present situation where costs have accelerated. Each piece of the solar puzzle has to work together to achieve the solar success we know from our recent history.
Solar thrived with commercial and utility projects leading the way to new developments. Residential companies are expanding their programs to make home electricity below the electric costs bringing owners immediate price reductions. Throughout the residential, commercial, and utility verticals, business is challenging.
Companies consider the price of the materials, permitting, financing, and installation costs. Historically, prices were reduced quarterly until 18 months ago. The solar business model was built on price reductions. Many reductions came from enhancing procedures, refined installation practices, improving permitting, and building and using proven financial modeling. Now not even all these advancements can prevent the price from being so high, causing the profits to disappear.
The present disruption has caused many projects to move beyond Q3 and Q4 2022 to semi-accommodate the delays. Others have moved their project from a year to 18 months out. I hope costs and availability allow project completion and profit. You would think that it is time to manufacture in the US.
Although US manufacturing has many complexities, once all the essential materials, people, and supplies are activated, the US market changes. Supply chain issues disappear unless an exception happens. Contracts have the strength of state laws. Therefore, achieving the highest production quality would be expected to be superior.
Manufacturing in the US will enhance every other area of the US solar market’s ability to deliver modules at downward cost trends. Initially, the price per watt may be higher when looking at pure costs. Yet if you consider the cost of projects not getting completed, engineering changes because of equipment unavailability, and the potential response that the price we agreed on is going up. Then maybe the extra price releases other issues equalizing the pricing.
If suppliers are not available, then there would be the loss of good people because the industry cannot get supplies to develop projects. With the US-made, you change the US manufacturing equation. We control our energy destiny.
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