2020 is a year that most of us will soon want to forget. The pandemic-induced global recession that dominated the year will be felt for some years to come. Like most industries, the solar industry felt its share of turmoil in 2020, but industry successes were still achieved and optimism for a bright 2021 is very much warranted.
Solar Industry Feels the Pandemic Pinch
It won’t be until early 2021 when we can get a more complete picture of the job losses the solar industry suffered in 2020, but the numbers are sure to be pretty grim. Earlier this year, the Solar Energy Industries Association (SEIA) predicted that 38% fewer people would be employed in the industry through June than what their earlier pre-COVID projections called for, effectively wiping out 5 years of solar job growth.
Photo Source: SEIA
Records Still Get Broken
Despite the unprecedented challenges that 2020 presented, the solar industry was still able to reach impressive new heights.
Solar accounted for 43 percent of all electricity-generating capacity added in the U.S. in 2020, according to the Q4 Solar Market Insight report, jointly released earlier this month by Wood Mackenzie and the SEIA. The report also notes that 2020 is likely to surpass 2016 as a record year for solar deployment with 19 GW of new solar capacity expected to be installed by the time the year is over. The likely record-breaking year is owed in large part to the stability that the utility PV segment has provided in an otherwise unpredictable year. Utility-scale solar accounted for 70% of the total 3.8GW of solar capacity installed during Q3.
It was the residential and commercial sectors that bore the brunt of the pandemic-induced turmoil from earlier this year as statewide shutdowns disrupted a business model that relies heavily on door-to-door sales. In a somewhat miraculous turnaround, the residential solar sector is still poised for a record-breaking year. Bloomberg NEF is forecasting that a record 3 GW of residential solar will be installed on U.S. homes in 2020.
If the projection comes to pass it will only underscore the broader industry’s adaptability and staying power in the face of unprecedented challenges. By embracing digital sales amid statewide lockdowns limiting person-to-person interactions, residential solar installers were able to broaden their customer pool in a way that can bear fruit even when a return to “normal” is achieved. By Q3, most state lockdowns were lifted and homeowners stuck spending more time at home embraced the opportunity to make energy efficiency upgrades to their homes. With work from home arrangements likely being the new norm at least through the first half of next year, residential solar may continue to ride its positive momentum to another record-breaking 2021, as Bloomberg NEF predicts.
Tesla’s Big Year
Aside from biopharma companies who led the way in creating a COVID-19 vaccine, it’s hard to find a major company who had a bigger year than Tesla.
At the start of the year, Tesla’s stock price was near $85/share. The company’s stock will end up finishing the year above $700/share. To put Tesla’s stratospheric 2020 rise in perspective, the company’s market cap of over $700B is greater than the five top-selling global vehicle making groups combined! The startup company that naysayers once wrote off as just another flash in the pan is now trading on the S&P 500, one of the world’s most recognizable stock market indices.
Tesla’s rise up the ranks of the world’s most valuable companies coincides with a growing realization in the auto industry, and on Wall Street, that the days of internal combustion engine (ICE) dominance in the auto industry are clearly numbered.
A perfect storm of sorts occurred in 2020 to bring the electric vehicle industry to this point. Stricter global regulations on vehicle emissions and ever-growing support among consumers for electric vehicles continue to make the economics of gas-powered vehicle production less and less favorable for auto makers. General Motors, who has dominated the gas guzzling pick-up truck space for decades, recently committed to spending $27B on electric vehicles. These expenditures will, for the first time, exceed the company’s planned investments in gas-powered vehicles.
Bloomberg projects that electric vehicle sales may be headed for a record in Q4. From their analysis:
“The current quarter may well be the first ever in which automakers sell 1 million fully electric and plug-in hybrid vehicles worldwide. It took the industry until 2015 to get its first million on the road. The global fleet is now about to cross the 10 million mark.”
Technological advancements have also contributed mightily to the electric vehicle industry’s brightening prospects. Tesla, of course, has been the industry leader on this front, and they unveiled even more technological breakthroughs in 2020. Namely in the form of new lithium-ion battery innovations that Elon Musk promises will allow Tesla to bring a brand new autonomous electric vehicle at a price point of $25,000 to the auto market within the next 3 years.
Photo Source: Tesmanian.com
Changes in Washington Fuel Industry Optimism
In some rare good news for the solar industry out of Washington, the omnibus spending bill and COVID relief package passed by Congress and signed by the President in December included an extension of the solar investment tax credit (ITC). The ITC was scheduled to drop from 26% to 22% in 2021, but will now stay at 26% for two more years. This important solar incentive has worked wonders in recent years to encourage more homeowners to embrace solar. Its extension is a big deal and one of the few successes the industry achieved on Capitol Hill this year.
Efforts by the Trump Administration to stymie growth in the renewables sector over the past 4 years have been well-documented. On the whole, Trump’s efforts have been futile as the solar industry reached all manner of solar capacity and generation milestones during his term. There is still no doubt, however, that the solar tariffs levied by the Administration injected unnecessary uncertainty in an otherwise stable industry, hurting solar workers and company balance sheets in the process.
The impending inauguration of Joe Biden as the 46th President of the United States couldn’t come at a more crucial time for the solar industry and for climate change advocates. Solar industry players aren’t looking to the Biden Administration for an industry-saving life preserver so much as they are just looking for the federal government to take their foot off the industry’s neck.
Photo Source: CNBC
The Biden-Harris Administration will assume office as the most pro-renewables presidential administration – by far – in U.S. history. Biden has called for investing $2 trillion over 4 years in clean energy in an effort to meaningfully reverse the harmful effects of climate change. By comparison, the Obama-Biden Administration set aside $90 billion for clean energy investments in the American Recovery and Reinvestment Act (ARRA) in 2009. The nearly 2,000 times increase in the former figure shows just how rapidly the politics of climate change have changed in just over a decade. Biden’s clean energy plan also calls for achieving 100% clean electricity nationwide by 2035. Such an ambitious goal would likely require installing and bringing online hundreds of millions of solar panels nationwide.
Much of what can be achieved on the renewables and climate change front in Biden’s initial term will hinge on the composition of the Congress. Another round of economic stimulus and an infrastructure bill are likely to be early term priorities in 2021 for the Biden Administration, both of which could be ripe for bi-partisan support and include significant investments in clean energy. Regardless, the solar industry will rejoice in having a friend, not foe, in the White House for the first time in 4 years and the industry’s job creation potential will likely take off starting in 2021.
With the extension of the ITC now enshrined in law, a new pro-solar Administration soon assuming office, and plans for historic clean energy investments by the federal government, this may be the time to bet big on the solar industry. We look forward to chronicling what is shaping up to be a prosperous 2021.
Cover Photo Source: Orange County Register