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PV prospects look bright in the U.S. despite COVID-19 crisis

June 1, 2020 PV InfoLink

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COVID-19 has taken a heavy toll on residential solar in the U.S. As staff shortage and social distancing make installation difficult, residential solar sector saw 19% job cancellation rates and 53% job postponement rates, according to a survey conducted by the Solar Energy Industries Association (SEIA) in March.  

Different stories 

Smaller companies focusing on rooftop solar sector are among the hardest hit by social-distancing rules, because door-to-door sales and installations of solar systems are no longer feasible amid coronavirus crisis. Luminalt, a solar company based in San Francisco that employs 42 people, have had all projects cancelled by clients since the pandemic began. Normally, the company has around six residential projects a week. 

The situation seems different in Minnesota, where installing and maintaining solar systems is considered an “essential service” and restrictions on installation are relatively relaxed. IPS solar, which has only 35 workers, said that rooftop solar installers are able to practice social distancing while working at job sites. Despite halts on installations, the company expects to receive more projects later this year from developers who want to take the 26% tax credit before it drops to 21% next year.

Minnesota introduced Value of Solar tariff in 2017 to compensate community solar customers to encourage more solar construction. After some declines over the past two years, community solar projects approved in 2020 will receive credits 4% higher than in 2019, an agreement reached by regulators and Xcel Energy after the utility made complaint about the potential spike in payments.

Last year, the solar rate paid to homeowners was 11 cents per kilowatt-hour, but the preliminary figure calculated for projects coming online in 2020 is 25 cents per kilowatt-hour. Although the higher rate would encourage solar adoption, the surge in tariff could harm the solar development, said David Shaffer, executive director of the Minnesota Solar Energy Industries Association, as it will reinforce Xcel Energy’s move to convince the Legislature to end the solar incentive.

Green economy

The U.S. solar market growth slowed last year, but the long-term outlook is still bright. According to the Solar Foundation, solar jobs have grown five times faster than job growth in the overall U.S. economy over the last five years. CEO Rob Appelhof of Cedar Creek Energy said that clean energy was a fast-growing job market before, and he believes that it will help stimulate the U.S. economy in the post-pandemic era. 

The Trump administration has recently approved the US$1 billion Gemini solar project in Nevada in May. The 690 MW project is expected to create jobs and boost economy as the nation is trying to get America back to work, said David Bernhardt, the US Secretary of the Interior.

Bright long-term prospects

According to Barron’s, the solar industry outperforms other energy sectors in the pandemic, so investors are still betting on solar for long-term gains. The potential of solar is evidenced by the growth of the Invesco Solar ETF (ticker: TAN), which is up 3.8% as of May. While the Energy Select SPDR ETF (XLE) has fallen 36%, the S&P 500 has lost 9%. 

Rationale behind are that oil and other commodities are expected to suffer from impacts of long-term low demand, whereas the solar industry only has to deal with short-term financing and demand problems. In addition, money will continue to flow towards renewables as the transition to a carbon neutral economy remains unchanged.


Reference:
Survey Findings: Things are bad and getting worse
How Bad Are the Lockdowns for Home Solar Companies? We’ll Soon Find Out
Minnesota solar installers continue ‘essential’ rooftop work
Minnesota ‘value of solar’ compromise likely to boost community solar payments
Trump administration says it will approve largest US solar farm
Guest column: Supporting the solar industry will help economy recover from COVID-19
Why Solar Stocks Are Persevering Through the Downturn

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