The U.S. solar industry has seen accelerated growth over the past ten years, which continued nearly unabated in 2020 despite the global recession and led to forecasted growth for 2021. Through Q3 2020, solar PV installations accounted for 43% of all new energy-generating additions. The renewable energy industry outpaced coal generation for 153 days versus 39 in 2019. Here’s how the solar industry has evolved and how trends have impacted the solar outlook for 2021.
Biden’s Clean Energy Platform’s Positive Impact on Solar Outlook
As leaders in business and government at the state and municipal level reinforced their commitment to renewables in 2020, they set the stage for accelerated growth in 2021. With Joe Biden’s new administration starting this week, that support extends to the federal level. Biden’s administration will execute on a platform that contains several stimulus initiatives aiming to achieve net-zero carbon emissions by 2050. Their measures include rejoining the Paris Accord, investing $400 billion over ten years in clean energy and innovation. What’s more, they promise to facilitate the deployment of renewable energy through federal actions such as procurement practices.
In the short-term, the eleventh-hour extension of the solar investment tax credit (ITC) in December 2020 means that solar projects in all market segments will still receive a tax credit at 26% for 2021 and 2022. Since the ITC was enacted, it has fuelled growth of 52% annually in the solar industry.
Solar Set to Have Record-Breaking Year
According to the U.S. Energy Information Administration’s (EIA) latest inventory of solar developers and owners, the solar industry will add a record 15.4 GW of capacity to the grid. That surpasses last year’s addition of nearly 12 GW and is projected to exceed wind growth for the first time. Half of the new utility-scale solar projects will be in just four states: Texas (28%), Nevada (9%), California (9%), and North Carolina (7%).
Utility-scale solar construction projects only saw minor setbacks in 2020 from supply chain delays and disruptions from lockdowns. This may play a minor role in the increase in new capacity over the previous year as construction experienced delay but is not responsible for the entirety of the increase.
The EIA also forecasts an increase of 1.5% in electricity consumption for 2021. In 2020, electricity consumption fell by 4% as commercial, industrial, and retail activity shut down. As the economic recovery momentum grows, electricity consumption will recover to a degree.
Business Moves to Green Energy Investment
2020 was a remarkable year for renewable energy investment. The year started with BlackRock CEO Larry Fink’s green letter to CEOs, stating that climate change is now a factor in companies’ long-term prospects. Globally, governments pushed for stimulus plans that included incentives for developing clean energy. In the U.S., the push came from state and municipal governments.
2021 promises to be the year of green finance action. According to a projection from Swedish bank SEB, $500 billion in green bonds are expected to be issued globally. Additionally, more investors are following BlackRock’s lead and dedicating a portion of their portfolio to sustainable investing.
Solar Provides Hope for 2021
2021 holds a great deal of promise for the solar industry with growth forecasted, a shift toward green investing, and U.S. federal support for clean energy in the form of tax credits and spending. As we start the year under a cloud of economic recession and increasing COVID cases, we can allow ourselves a bit of hope as the U.S. rejoins the fight against climate change.