Solar energy boom in the U.S. faces supply challenges: CNBC

solar energy

Solar energy in the United States is booming; it has surpassed the 100 gigawatts of capacity threshold, according to a new report by the U.S. Solar Market Insight and Wood Mackenzie; however, the industry is facing challenges as demand for components rise.

Firstly, the report, quoted by the CNBC found that America’s solar industry installed slightly more than 5 GW of photovoltaic capacity in the first three months of 2021; which is 46% higher than 2020’s same period.

Secondly, on a state level, it was Texas the one state which installed more solar; with 1,52 GW of capacity; followed by California and Florida, where governments installed 563 and 525 megawatts respectively.

Thirdly, according to the CNBC, it was in fact solar the 58% of all new electricity-generating capacity added in the U.S. during the first quarter; while wind represented most of the remainder.

Moreover, while the U.S. has been pushing solar industry, now reaching 100 GW of installed capacity; other markets have surpassed that mark. Towards the end of 2020, SolarPower Europe said capacity in the European Union stood at more than 137 GW.

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Solar energy challenges
Source: CNBC / U.S. Energy Information Administration, preliminary data for 2020

Solar energy facing supply challenges

On the other hand, the Covid-19 pandemic, in addition to a higher demand for components, is creating an atmosphere of challenge for the U.S. solar industry. The report by Wood Mackenzie highlights that “over the last several quarter, critical components for solar equipment; like polysilicon, steel, aluminum; also, semiconductor chips, copper and other metals; have become increasingly supply-constrained.”

In addition to the cited Covid-19 macroeconomic constraints, like the availability of microchips and a hike in shipping costs, the growing demand is causing commodity prices to increase and deliveries to be delayed.

Furthermore, Michelle Davis, principal analyst at Wood Mackenzie Power & Renewables; and lead author of the report, said, quoted by CNBC. “There’s no doubt this is impacting the solar industry. Installers are managing current equipment shortages; and also having to decide whether to renegotiate contracts.”

Finally, these factors are going to be critical in the energy transition agenda in the U.S. As moving away from fossil fuels will present several challenges for the industry.

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