A report finds that overall costs for installed solar systems were up by 12% due to high demand, stymied supply chains and labor shortages. Some question whether the prices will ever go back down. Photo via SunPower by Quality Home Services.
While the sun always rises in the east and sets in the west, solar energy prices are staying on the rise — a reversal trend for the industry.
The Covid-19 pandemic’s disruption on global supply chains, exacerbated by labor shortages, has led to increases in solar prices.
According to a report published by the Solar Energy Industries Association and Wood Mackenzie, a non-profit energy trade association and consulting group, solar prices rose quarter over quarter and year over year across every solar segment.
This is the first time residential, commercial and utility solar costs have risen in conjunction since the association began tracking prices in 2014.
In a separate report published in September by Rystad Energy, a Norwegian energy research and business intelligence company, global solar panel prices have risen by 16% this year when compared to 2020’s prices.
Overall costs, including labor costs, went up by 12% this year, which could limit “demand growth for the next few years.”
Though in recent years costs for solar projects have declined, cost reductions have petered-out and the cost is moving closer to a floor.
The main material in photovoltaic panels, mono-polysilicon, rose from $7.6 per kilogram in 2019 to $9 per kilogram in 2020. Costs for silver, copper, aluminum and steel have gone up as well.
The rise in material costs is impacting local projects in the Central Valley already.
AgLand Renewables, the California subsidiary of Maryland-based enviro-tech company CleanBay Renewables Inc., has seen material costs increase for the construction of its upcoming Central Valley project in Kings and Merced counties.
The facilities will use anerobic digestion and fertilizer formation technology to convert poultry litter into renewable natural gas and organic, controlled-release fertilizers.
One AgLand Renewables facility will be in Lemoore and the other in Merced.
The projects will include co-located solar power fields and microgrid technologies.
Executive Chairman of CleanBay Renewables and President of AgLand Renewables Thomas Spangler said that in California, AgLand is aiming to have more than 80% of its electricity provided by its co-located solar projects, which would also include the latest battery technology.
Though CleanBay Renewables and AgLand Renewables are able to absorb cost increases, it is impacting the total costs of the project.
“We have experienced supply, and commodity price escalation, but we are fortunate enough to be able currently absorb those costs. However we feel for those smaller projects or small business that are being crushed by these supply chain issues,” Spangler said.
Spangler said they are seeing prices for materials starting to stabilize, but that they don’t see prices going back down any time soon.
Construction for the projects will span two years, including time for environmental and engineering study work. Both are expected to be fully operational by 2024.
Officials with SunPower by Quality Home Services, a solar energy contractor in Fresno, said that for years, solar prices were going down and usage rates were going up, but the pandemic reversed that trend.
“During this pandemic, I think we’ve been experiencing an anomaly of not only supplies being in short demand, but the price of supplies and raw materials has skyrocketed. You mix that, along with the labor shortage, and everything is going up,” said Joe Holstein, president of SunPower by Quality Home Services.
Though the company is large with lots of buying power, Holstein said he is seeing prices for materials go up on a daily basis.
However, even with the increase in material prices and the labor shortage, the demand for solar is outstripping the resources of supply.
Along with cost increases in raw materials, there is a major shortage on electrical components such as breakers, electric boxes, and semi-conductors— “a perfect storm of a lot of different components that are driving this,” Holstein said.
Holstein expects prices in all industries to keep going up. He doesn’t expect them go back down anytime soon.
Even with these recent price increases however, Holstein says that is always better to install a solar energy system sooner than later.
“The absolute best time to go solar is as soon as possible,” Holstein said. “Before rates for parts and materials go up and labor goes up. Shortages are still in effect and rates are so high that it costs less to go solar than to stay with the utilities. There will never be a better time to go solar.”
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