How The U.S. Solar Market Survived The 2020 Pandemic
2020 has been a rollercoaster year in so many ways, and several global markets have been affected by the economic decline, including the solar industry. Despite the grossly anticipated loss by some solar markets, the United States is still managing to keep its head above water. With the projections for the solar market in 2020, it was expected that this would be the biggest year yet for the solar industry in terms of sales and installations. However, the onset of the coronavirus pandemic and subsequent social distancing measures created an unofficial global agreement that manufacturers, distributors, and other solar companies in the industry may suffer huge losses. Nonetheless, as the year went on, the U. S. solar market took some hits but managed to stay ahead. Here is a summary of the quarterly breakdown:
Quarterly reports from the Solar Energy Industries Association (SEIA) have shown minimal declines in solar installations over the last three-quarters, a pattern that seems to continue in this last quarter of the year. From the first to the second quarter (Q1 to Q2) of the year, there was a 6% decline in solar installations, which, when compared to other countries, is not so disheartening. Although residential and non-residential solar installations were reducing at sharp margins, the industry’s utility aspect still fared considerably well. One of the essential things that let the utility sector weather the pandemic’s impact was solar companies’ rapid response across the United States. Most of these solar utility companies were able to innovate ways to continue effective service while adhering to social distancing regulations in each state. Despite the reduction in installation and retail sales, the first quarter of 2020 still showed that solar accounted for 40% of power capacity in the United States.
By the 2nd quarter of 2020, the United States’ solar market reportedly installed 3.5GigaWatts direct current (GWdc) of new solar photovoltaic (P.V.) equipment. There was a 23% reduction in residential installation rates and a 12% decline in non-residential installations compared to the first quarter of the year. The rooftop solar industry took the biggest hit in the switch from Q1 to Q2. Leading companies reported massive declines, with installations from Sunrun falling to about 20%. SunPower saw a 30% decline, Vivint Solar had a 10% reduction, and installations by Sunnova fell to 9%. However, the utility sector was the opposite with a 9% increase in utility-scale installations, which represented about 71% of the solar capacity in Q2 of 2020. This increase in utility installations was also a 52% increase from the previous year, making the Q2 capacity of 2020 the largest Q2 capacity ever in the solar history of the United States.
Third Quarter – Present
As social restrictions began to ease, business operations resumed to a semi-normal state, and so did the rates of solar installations in the United States. By the end of July 2020, solar installations amounted to about 6 G.W., which is rather impressive and 4 G.W. more than the rate in July of 2019. Another remarkable event in the solar industry in Q3 was the acquisition of Vivint Solar by Sunrun in an all-stock transaction. The solar market slowly picked backed up, although residential and non-residential installations were still lower than expected. Nevertheless, it turned out that the worst outcome expected from the pandemic would not occur. Instead, reports from the SEIA and energy research firm, Wood Mackenzie, predict that there will be a total of 18GigaWatts in installation, which means the solar industry will generate enough energy to power over 3 million homes. The reports also state that from 2021 to 2025, the Solar Market in the U.S. will install nearly 100GigaWatts of solar.
These reports show promising growth for the U.S. solar market but, to fully grasp the basis for these forecasts, we need to understand the factors that contributed to how the U.S. survived the pandemic. These factors include;
One of the best things the U.S. Solar Market did at the onset of the pandemic was to swoop into immediate action for problem-solving. As scientists and researchers kept turning up new information about the coronavirus and how to curb the spread, solar industry front-liners were adapting to new business operation models and ensuring that customers were still engaged. The fast and efficient action carried out by different sectors of the solar industry, and solar companies created a soft landing for the U.S. Solar market during the pandemic.
In line with the immediate action mentioned above, solar companies, particularly those focused on residential installations, took to the digital market space to advertise and close transactions. This move contributed significantly to the relatively low decline in rates of residential installations. Other forms of solar-related trading were also moved online to comply with social distancing restrictions and best practices.
As a part of their plans to mobilize new customers, solar dealers and installation companies began to offer amazing deals on solar contracts. These deals for solar contracts went as low as being completely free for solar customers. Some top companies like SunPower and Sunrun also offered promotions on their lease contracts that stretched up to six months. Several other manufacturers and dealers have adopted different models of this business idea and found a way to get more customers in the midst of it all.
Moving Into The New Year
The coronavirus pandemic put a pause on so many global events and economic events, even sending some countries into a recession. However, the U.S. solar market performed way better than expected, and with some brand new records too! Wood Mackenzie has published the projections for the solar market, and 2021 seems to be holding better news for the U.S. Solar market. We are excited to find out if the New Year will match up and surpass the progress made in 2020!