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Released August 18, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--The solar photovoltaic generation expansion in the U.S. in recent years is the result of several factors, including the ongoing Investment Tax Credit (ITC), expansion of state-level renewable portfolio standards, the declining cost for materials and technologies as well as the overall push toward renewable energy. But temporary obstacles to solar development loom in the near future.
Industrial Info is tracking nearly $20 billion worth of solar energy projects that are under construction in the U.S.
Click on the image at right for a graph showing U.S. solar power project activity in the construction phase, by market region.
In the first half of 2021, the solar sector saw an increase in the cost of development. Several factors have contributed to this rise, such as protective tariffs on imported solar cells, primarily from China, that were put in place under the Trump administration. The safeguard tariffs focused on crystalline silicon photovoltaic cells. The tariff is expected to expire in February 2022. On top of this, new tariffs of 25% and 10% on imported steel and aluminum, respectively, were put in place.
Also, duties have been placed on semiconductor imports.
All this plus other factors increased the cost of solar panels in the U.S. by approximately 35% to 45%. When the new administration was brought on board, it was believed among market observers that President Joe Biden would rescind these tariffs; he did not and chose instead to let the tariffs expire according to their original timelines.
The price of silicon has increased by at least 80% over the last two quarters. In addition, the price of domestic hot-rolled steel hit $1,800 per short ton as of July 14, a significant increase over last year. There are many contributing factors to the rise in steel prices, but issues relating to the Power Industry include infrastructure upgrades that are increasing the demand for poles and towers and racking system components for solar projects.
Another factor affecting the cost of solar development is transportation and delivery. Supply-chain disruptions and the increase in demand for shipping and transportation services increased the cost of project development around the world. In addition, industrial insurance costs for the sector have greatly increased.
Also increasing costs are interconnect agreements with regional transmission organizations (RTOs)/independent system operators (ISOs) and upgrades to power lines and substations to bring solar power to market. About 293 project withdrawals from the PJM Interconnection (PJM) and Midcontinent ISO (MISO) interconnect queue have occurred between 2019 and 2021. For related information, see August 16, 2021, article -- Ineffective Interconnect Agreement Process Causes Major Power Project Delays.
One positive trend is the push for zero emissions and green initiatives, which have increased demand for solar power generation from the industrial sector and government facilities, which are pushing to decrease emissions. The downside of this this boom is that solar power pricing for power-purchase agreements has increased by about $3.50 per megawatt-hour, or about 12% to 14%.
There is still uncertainty as to what degree these factors will affect the Power Industry, but it seems likely some delays and possible cancellations are on the horizon. On the flipside, tax incentives offered by federal and state governments are part of the positive initiatives that support the solar photovoltaic marketplace.
Industrial Info is tracking approximately 10 gigawatts of solar power expected to come online by the end of 2021, focused primarily on the Southwest, Rocky Mountain and Great Lakes market regions. Looking to 2022, there is $45 billion of development projected to start construction, with a focus on the Southwest, Great Lakes and West Coast market regions.
One of the largest projects now under construction is Pegasus Group Holdings' (Las Vegas, Nevada) 340-megawatt (MW) solar array, known as The Hive, in Mohave County, Arizona. The array will include 160,000 solar panels fixed to mobile trailers placed across 717 acres. The facility will provide power to an upcoming data center, and excess power will be released to the grid. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for the project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
Industrial Info is tracking nearly $20 billion worth of solar energy projects that are under construction in the U.S.
In the first half of 2021, the solar sector saw an increase in the cost of development. Several factors have contributed to this rise, such as protective tariffs on imported solar cells, primarily from China, that were put in place under the Trump administration. The safeguard tariffs focused on crystalline silicon photovoltaic cells. The tariff is expected to expire in February 2022. On top of this, new tariffs of 25% and 10% on imported steel and aluminum, respectively, were put in place.
Also, duties have been placed on semiconductor imports.
All this plus other factors increased the cost of solar panels in the U.S. by approximately 35% to 45%. When the new administration was brought on board, it was believed among market observers that President Joe Biden would rescind these tariffs; he did not and chose instead to let the tariffs expire according to their original timelines.
The price of silicon has increased by at least 80% over the last two quarters. In addition, the price of domestic hot-rolled steel hit $1,800 per short ton as of July 14, a significant increase over last year. There are many contributing factors to the rise in steel prices, but issues relating to the Power Industry include infrastructure upgrades that are increasing the demand for poles and towers and racking system components for solar projects.
Another factor affecting the cost of solar development is transportation and delivery. Supply-chain disruptions and the increase in demand for shipping and transportation services increased the cost of project development around the world. In addition, industrial insurance costs for the sector have greatly increased.
Also increasing costs are interconnect agreements with regional transmission organizations (RTOs)/independent system operators (ISOs) and upgrades to power lines and substations to bring solar power to market. About 293 project withdrawals from the PJM Interconnection (PJM) and Midcontinent ISO (MISO) interconnect queue have occurred between 2019 and 2021. For related information, see August 16, 2021, article -- Ineffective Interconnect Agreement Process Causes Major Power Project Delays.
One positive trend is the push for zero emissions and green initiatives, which have increased demand for solar power generation from the industrial sector and government facilities, which are pushing to decrease emissions. The downside of this this boom is that solar power pricing for power-purchase agreements has increased by about $3.50 per megawatt-hour, or about 12% to 14%.
There is still uncertainty as to what degree these factors will affect the Power Industry, but it seems likely some delays and possible cancellations are on the horizon. On the flipside, tax incentives offered by federal and state governments are part of the positive initiatives that support the solar photovoltaic marketplace.
Industrial Info is tracking approximately 10 gigawatts of solar power expected to come online by the end of 2021, focused primarily on the Southwest, Rocky Mountain and Great Lakes market regions. Looking to 2022, there is $45 billion of development projected to start construction, with a focus on the Southwest, Great Lakes and West Coast market regions.
One of the largest projects now under construction is Pegasus Group Holdings' (Las Vegas, Nevada) 340-megawatt (MW) solar array, known as The Hive, in Mohave County, Arizona. The array will include 160,000 solar panels fixed to mobile trailers placed across 717 acres. The facility will provide power to an upcoming data center, and excess power will be released to the grid. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can click here for the project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
