From pv magazine 11/2021
The Invesco Solar ETF (TAN) increased 9.1%, while the S&P 500 only increased by 4.3% and the DJIA only increased by 3.9%. Senator Joe Manchin informed the White House and legislative leaders that he will not support the Clean Electricity Performance Program, consequentially discouraging U.S. utilities to switch to clean energy sources such as solar. Meanwhile, solar demand continues to follow a promising track, yet the supply chain has been unable to keep up.
Despite the industry’s short-term optimism, pricing throughout the whole upstream chain is rising due to a new disruption: China’s coal scarcity and limited silicon metal supplies. The abrupt impact in the solar world has been the increase in silicon metal and polysilicon pricing adding to the already existing inflation within the solar space. As a result, certain module providers have postponed or canceled deliveries to India. Furthermore, there is a module supply shortage in Australia. However, we expect that this particular issue will be alleviated in part, once regions in China where manufacturing is concentrated receive new emission and power consumption quotas.
The danger of project push-backs is still a concern. Some developers are delaying project starts scheduled for the first quarter of 2022 due to persistently high input costs and the withhold release order limitations on modules. As a result of there being limited modules, some engineering, procurement, and construction providers are sending workers home. Despite the potential for project delays until 2023, some developers are still planning to install piles/trackers in 2022 and may delay module supply, resulting in prolonged commercial operation dates.
We also see the potential of U.S. renewable incentives being slightly altered. There is a strong possibility that the existing 10-year language for the Solar Investment Tax Credit (ITC) and Production Tax Credit (PTC) extension could be decreased by two to five years. Nonetheless, we continue to believe an extension to be a considerable win for the sector. Regarding the time frame, chances are the budget reconciliation bill will not get passed until later in the year.
By Jesse Pichel
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