‘Opposite Dynamics’: Growing Supply Chain Problems Hinder Solar Advances in US


United States installed 5.4 GW of direct current solar power plant to set a third quarter record, but escalating supply chain constraints and costs in all market segments will lead to lower installations by 25% over the next 12 months, depending on the solar energy industries. Association (SEIA).

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The new capacity was 33% higher than a year earlier, when the industry began to recover from the Covid-19 dislocations that most affected residential PV as well as utilities, the main drivers of solar growth in the country.

The United States installed 15.7 GW over the three quarters, “on track to easily exceed 20 GW” this year, which would surpass the record 19.2 GW in 2019, the authors wrote. Overview of the US solar market, published jointly by SEIA and the Wood Mackenzie Research Group.

“The US solar market has never seen so many opposing dynamics,” said Michelle Davis, senior author and senior solar analyst at WoodMac. “On the one hand, supply chain constraints continue to intensify, putting gigawatts of projects at risk.”

“On the other, the Rebuild Better Act would be a major market stimulus for this industry, establishing the long-term certainty of continued growth, ”she added.

The report quotes solar industry veterans as saying that purchasing equipment and pricing projects under development are “by far the most difficult they have ever known”, with US inflation rising by 6. , 8% in November compared with the same month a year ago, the fastest pace. in 39 years.

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The industry’s long-standing over-reliance on component imports from Asia has been fully exposed this year. Utility PV suffers the most, as only 20% of the modules used in projects are made in the United States. This segment represents 64% of installations in the third quarter.

“I can verify that it’s not just us, but other developers have a lot of projects out there that have shelving in place without solar panels on it,” Art Fletcher, executive vice president of construction and manager of purchases at Invenergy, a leading US developer of solar and wind power, said at the American Cleanpower annual conference last week.

“Supply chain issues extend across the portfolio,” he said, noting that Invenergy is creating more jobs than at any time in its history given the high demand for clean energy. “It becomes a challenge. It has strained our resources on a whole new level than what we have seen in the past. “

To get the panels from points of origin in Asia to job sites, developers face a gauntlet of obstacles and pay three or four times more shipping costs than in 2019 before the pandemic.

These include the worst congestion in years at major US ports handling containers. Those in Long Beach and Los Angeles, the nation’s busiest and most important entry points for solar components, have up to 30 container ships in sight waiting for weeks to unload from berths and 50 or more in the queue further into the Pacific Ocean.

Once unloaded, shipping containers sometimes remain in nearby holding areas for additional weeks due to railroad congestion and shortages of trucking equipment and workers. This slowdown in handling is causing bottlenecks throughout the American supply chain. When they do eventually arrive in overcrowded inland distribution centers, further processing delays are likely before delivery to final destinations.

Business problems add to supply problems

Trade-related issues are also worsening the supply situation. US Customs and Border Protection detain modules suspected of having polysilicon processed from metallurgical silicon manufactured by Hoshine Silicon Industry and its affiliates, which allegedly use forced labor against Muslim minority groups in the Xinjing Uyghur Autonomous Region in China.

While the agency Withhold the release order (WRO) allows importers to demonstrate that polycrystalline silicon in their products comes from outside Xinjing, project developers say the review process is cumbersome and decisions take too long to render.

“Things just sit there when some of these importers feel in good faith that they’ve hit the threshold. We have to do better there. We need to get these things done, ”Ray Long, senior vice president of policy and external affairs at Clearway Energy, said at the conference.

“We know that in 2022, with all the projects under construction, if things stay as they are, the panels will not complete these projects on time and they will be significantly delayed,” he added. Clearway has more than a 17 GW solar, wind and battery storage pipeline.

The industry has used more components from Malaysia, Thailand and Vietnam instead of those from China which face U.S. anti-dumping and countervailing duties (which have been reduced) imposed by former President Donald Trump. SEIA and the developers oppose it because it increases the costs of solar power and has largely failed to encourage more domestic production.

Last month, the Commerce Ministry dismissed petitions from an anonymous group of solar power makers here alleging that Chinese panel producers were circumventing those rights by completing processing in minor capacity in Asian countries. South East.

While the move was good news for developers here, “the threat of petitions has blocked equipment shipments from these countries due to unlimited risk, further exacerbating supply chain constraints,” the authors wrote. of Overview of the US solar market.

Upside down Rebuild better

The $ 2 billion Rebuild Better Act in the Senate, which passed the House of Representatives last month, has a significant advantage for long-term solar growth, according to the report. It includes approximately $ 555 billion in clean energy funding over 10 years,

The House version includes extensions and modifications to the clean energy tax credits, for example allowing project promoters to choose their direct payment, depending on whether a project meets national content and labor requirements. union work.

WoodMac estimates that the extension of the federal Investment Tax Credit (CII) would translate to 43.5 GW of additional solar capacity from 2022 to 2026, most of which would come from utility solar power.

While large-scale projects will face short-term supply chain constraints, an extension of ITC would maintain the segment’s economic competitiveness and partially offset the resulting price increases, according to the report.

He noted that solar would also be eligible for the Production Tax Credit (PTC), now used by onshore wind projects, “which may be a richer incentive than ITC for projects with particularly capacity factors. students”.

Utility solar which takes an important place in the energy transition plans of President Joe Biden until 2035, his goal to achieve a carbon-free electricity grid. The White House considers PV the cheapest clean energy source that could provide at least 37% of the country’s electricity within 15 years compared to 3.5% today.

The report warned that more tax credits will be needed to help meet Biden’s goals of an 80% clean grid by 2030 and net zero carbon economy-wide U.S. economy. by 2050.

He cites transmission and distribution constraints which constitute an “increasingly stubborn challenge” for solar projects in all segments (the others are community PV and residential PV).

“While an ITC extension can help developers pay for the costs of upgrading the interconnect, more network hosting capacity and better network integration are still desperately needed,” the authors said. “Fortunately, the bill also contains provisions to encourage the development of transmission.”


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