COVID-19 has disrupted value chains and impacted power industries worldwide. The situation in the U.S. solar industry is no different, with Q1 witnessing record installations. However, even with utility-scale installation improving, the pandemic is likely to dampen sentiments and mute project development activities for the remaining part of the year, according to GlobalData, a data and analytics company. As power demand remains low, delays in project permissions, disruptions in equipment supply chains, and workforce reductions are likely to pose developmental issues across value chains.
After the COVID-19 outbreak, the distributed solar photovoltaic (PV) capacity market is anticipated to decline by approximately a third, compared with the previously estimated forecast. The annual solar PV capacity was earlier estimated to grow by about 60% over 2019. However, post-COVID-19, it is estimated to grow by 35% to 40% over 2019. This growth is largely attributed to the steady performance of the grid-connected utility-scale segment.
"The performance of solar PVs in Q1 was not affected because of economic stability in the country and the implementation of the lockdown toward the end of Q1," said Somik Das, senior power analyst at GlobalData. "The effects of the pandemic are likely to be seen in the remainder of the year. However, it is estimated that 2020 will have a lopsided performance, with utility-scale projects likely to constitute about 70% of the 2020 installation, making up for the lackluster performance of the small-scale solar segment. Solar PV annual installations are likely to grow by about 40% compared with 2019."
Large-scale projects saw lesser hindrances but the lockdown and social distancing norms created issues for small-scale and residential projects. The imposed social distancing guidelines affected the total value chain, including manufacturing, sales, permitting, financing, installation, and procurement. Hence, estimates suggest that residential projects will likely see a decline of 24% to 26%.
"Although utility-scale projects have seen a consistent level of procurement so far, the uncertain economic conditions coupled with falling electricity demand and wholesale electricity prices might affect these projects in the future," Das added. "However, at present, the solar PV industry is one of the fastest-growing in the country and has the potential to contribute to the country's economic recovery in the COVID-19 standstill."