Wood Mackenzie research shows all-in system costs for solar in the US is coming down significantly in a post-COVID-19 scenario compared to pre-COVID-19 system cost assumptions. (Source: Wood Mackenzie Power & Renewables)
- Wood Mackenzie research says the US market is seeing solar system cost reduction at a faster rate than expected as module prices decline
- System costs for bifacial modules too are coming down alongside monofacial mono PERC systems, but things could change if bifacial modules come under Section 201 tariffs
- Residential segment to suffer the most with COVID-19 impact but EPCs and developers are now looking at bringing down costs through soft cost reduction
- Demand is likely to pick up again by the end of 2020 and companies, as per the analysts
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A stronger than expected drop in module prices is bringing down solar PV system costs in the US across all segments, according to Wood Mackenzie Power & Renewables. The analysts now expect residential system prices with mono PERC modules to decline as much as 17% from 2020 to 2025. This is a 3%points stronger drop from 14% expected before the COVID-19 forecast.
A drop of 16% for commercial and 20% for utility system costs is anticipated during this period, which is 3% points more than expected earlier for commercial (13%) and 4% points higher for residential (16%) – that’s all thanks to global module price drops.
“In 2020, while bifacial modules are currently exempt from Section 201 tariffs, bifacial system costs are expected to sit at around 1% less than monofacial mono PERC systems,” said Wood Mackenzie Research Analyst Molly Cox. “However, in a scenario where bifacial modules were subject to Section 201 tariffs, system costs would be higher than monofacial mono PERC systems.”
Since hardware costs will decline at a slower pace going forward, EPC companies and developers will now be focusing more on soft cost reduction which comes from customer acquisition, permitting and inspection costs, the analysts believe. The going will not be easy though as COVID-19 impacts will be felt most strongly in the residential segment.
As for C&I and utility segments, system costs will be determined by module cost reduction as module makers lower their margins and look for supply chain component cost reduction in order to stay competitive in times of reduced demand due to the pandemic.
Wood Mackenzie expects demand for solar, down due to the pandemic, to pick up pace by the end of 2020 and thus before the investment tax credit (ITC) expiration, which will bring back better times for companies across all segments ‘just like we saw at the end of 2019’.
Howeve, the early June released Q2/2020 US Solar Market Insight report, by Wood Mackenzie Power & Renewables along with the Solar Energy Industries Association (SEIA) sees a 33% annual increase in installations for 2020 to around 18 GW, which is only a decline of 9% from the previous forecast of 20 GW due to the pandemic’s impact (see US Installed 3.6 GW DC New Solar In Q1/2020)