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2022 Could Be a Record Setter for Solar Power

2022 could be a groundbreaking year for solar projects in the U.S.—if supply chain challenges don’t interfere, according to POLITICO Pro (subscription).

What’s happening: “The U.S. Energy Information Administration projects U.S. companies will install 21.5 gigawatts of utility-scale capacity this year, shattering the annual record of 15.5 GW set last year.”

Industry uncertainty: However, owing to shipping delays, rising equipment costs and other factors, solar-project developers are not optimistic about their ability to complete the projects they had slated for 2022.

  • “Developers increasingly are engaged in complex contract negotiations with potential buyers, [Wood Mackenzie solar analyst Sylvia Leyva] Martinez said. Where past contracts typically were set at fixed prices, new solar contracts now more often include price hedges, collars and other financial tools intended to limit risks to developers and prospective buyers.”
  • The negotiations are in response to COVID-19-induced cost pressures, Martinez said.

A sunnier picture: Still, some analysts believe the unprecedented number of solar projects will come to fruition this year anyway. BloombergNEF solar analyst Tara Narayanan “predicted developers would overcome the supply chain constraints to achieve record installations this year, though she noted some delays are likely.”

Overall: There is broad agreement that the solar industry’s challenges are transitory and that solar-project developers will see and benefit from ramped-up manufacturing output to meet rising demand for solar installations.

Massive growth: 21.5 GW of solar is a big number for a single year. “By comparison, EIA said it expects the United States will add 7.6 GW of wind this year after registering a record 17.1 GW of new capacity in 2021. Natural gas additions were 6.3 GW in 2021 and are projected to reach 9.6 GW in 2022.”

The NAM says: “Growing pains hit any industry as it scales up; now that solar is on par with other critical energy options like fossil, nuclear, hydro, biomass and wind power, it’s no surprise that solar is facing complicated challenges, too,” says NAM Vice President of Energy and Resources Policy Rachel Jones. “But that shouldn’t mean retreat. The global supply chain crunch impacts our energy security and access in many unexpected ways, and it’s a good reminder that energy diversity and balance must remain central.”

Access a range of energy resources to reduce costs and improve efficiency, sustainability and resiliency at your facility. NAM Energy connects you to an expert energy adviser who can assess your operations and help you save money, time and effort when implementing solar, combined heat and power and other energy solutions.

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