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2020 has been an unusual and difficult year, to say the least.
The world is experiencing not only a global pandemic, but political unrest, a struggling economy, and a slew of natural disasters, including hurricanes in the southern United States and wildfires on the West Coast. Times are changing so rapidly and dramatically that it can be nearly impossible to see the bright side. While in recent years demand for renewable energy has grown significantly, particularly amid the push to slow climate change and utilize more sustainable sources of energy, this unprecedented year has hindered these developments. As 2020 draws to a close, the solar industry is reflecting on this past year’s challenges, triumphs, and what can be expected in 2021.
The solar industry has been steadily progressing since 2010, with the solar PV capacity installed each year either equal to or greater than the year before. At the start of 2020, 2019 marked the highest capacity installed at approximately 115 GW throughout the world.
According to the European Union’s energy roadmaps, each member country was projected to have even more renewable energy projects in the coming year: the United States anticipated investment tax credits would bolster the value of solar power installations, and China, the leader in global solar power installations, was expected to add more solar capacity.
Nevertheless, these positive predictions were undermined by COVID-19. Now, 2020 is expected to be the first year in the last decade to record declines in solar PV installations. While estimates projected over 140 GW additional capacity, analysts now estimate this will be reduced to about 100 GW, keeping the demand line flat. However, considering the major disruption caused by COVID-19, the solar industry has managed to be surprisingly resilient.
The Supply Chain
The first issue that the solar industry started to face back in early 2020 was the interruption of the supply chain. China holds nearly 60% of the solar panel manufacturing industry in the world, and is a leading producer of the global supply of inverters, batteries, trackers, and charge controllers.
When the outbreak of COVID-19 started back in April and the Chinese government began to shut down under quarantine orders, key areas of the solar manufacturing industry, such as Jiangsu, Guangdong, and Anhui, global suppliers for many solar projects, abruptly stopped.
Many manufacturing companies temporarily ceased production, but after two months of irregular operations, solar panel companies gradually started to get back on track, until reaching nearly pre-COVID-19 production levels. Still, this delay caused not only shifts in the project timelines, but also conflicts during the EPC management of projects between clients and installers around the world.
Solar Industry Sectors
According to a recent report by the Solar Energy Industries Association (SEIA) released in September 2020, the U.S. solar market installed only 3.5 GW of solar PV capacity in the second quarter – 6% less than in the previous quarter.
While the first quarter of the year was free from the effects of COVID-19, the second quarter experienced the full force of the pandemic. Compared to the first quarter (Q1), the residential sector was crippled, reporting solar installation down nearly 23% due to early shelter-in-place orders that restricted sales and installations. Installations in the commercial sector were down 12% from Q1. However, construction projects in the utility sector suffered minimal consequences and comprised nearly 71% of all solar capacity brought online in Q2.
Despite decreased solar grid-tied projects in both the commercial and residential sectors, the initial forecasts for COVID-19-related consequences were less severe than anticipated: solar energy represented 37% of all electricity-generating capacity additions in Q2, almost the same as 2019 (40%).
The Unexpected Outcome: California
California has consistently led the U.S. in residential solar.
Not only has California remained the country’s leader in residential sector installations (see figure 2), 2020 has actually been the best year for solar plus energy storage in California. The state’s solar plus storage energy market has almost quadrupled from 2019, with up to 50,000 homes installing a battery system coupled with solar PV.
According to Bloomberg, one of the driving forces of this massive adoption of batteries has been the catastrophic wildfires in California, along with the corresponding power outages, protective precautions in which power is preemptively shut down by a utility due to severe weather conditions. These unexpected events, combined with shelter-in-place orders and increased work-from-home protocols, have caused many customers to consider the necessity of a source of energy that is independent from the grid.
Additionally, many states have adopted time-of-use rates, programs in which solar energy is generated during the day when tariffs are low and dispensed at night when tariffs are high, making solar plus storage even more attractive to homeowners. As innovation increases, the cost of energy storage projects have reduced significantly, prompting homeowners to take advantage of battery systems.
California’s government has taken a major step in promoting solar power: as of January 1, 2020, a new mandate requires all new constructions in California to install solar PV systems.
These systems are augmented by new state-of-the-art battery technologies and system optimization software that allow solar companies to effectively assess revenues from curtailment demand response and ancillary services. These developments are intended to enable even more accelerated deployments of battery systems. Among this year’s innovations are LFP batteries. Wood Mackenzie has predicted LFP is set to overtake lithium-manganese-cobalt-oxide (NMC) as the dominant stationary storage chemistry within the decade, growing from 10% of the market in 2015 to more than 30% in 2030. This non-toxic, non-hazardous solution featuring Lithium-Iron-Phosphate (LiFePO4) cells allows for longer battery cycle life, increased reliability, and enhanced safety. In August, Electriq Power launched its own model, the PowerPod LFP.
The world is shifting towards reliance on solar power as a sustainable and eco-friendly source of renewable energy, and we are proud to play an essential role in this transition. As we reflect on the lessons learned and challenges overcome in the past year, we look forward to 2021 and continuing to contribute to a greener future.
As 2020 draws to a close, we are reflecting on this past year’s successes, challenges, and what can be expected in 2021.
At the beginning of the year, we never thought that webinars would become such an integral part of our business model. Fast forward to December, and we’ve become pros at checking audio levels and lighting to host our monthly webinars – one of the many ways we have pivoted to meet the needs of our customers.
This year, the energy storage industry has seen an exponential increase in demand for home battery solutions due to new work-from-home protocols. Under statewide restrictions imposed amid the coronavirus outbreak, California deemed solar+storage an essential service, allowing installers to continue installing and servicing homes with PowerPod systems, and for our engineering team to advance product development. California homeowners in particular have turned to battery storage in preparation for wildfire season and Public Safety Power Shutoffs.
Adapting to the new normal has been an adjustment for us all, but we’re happy to have found ways to effectively connect with our customers and carry on some semblance of “business as usual.”
Through all these unexpected changes in 2020, we have still managed to form additional strategic partnerships, create new products while refining existing ones, and add new members to the Electriq team.
Like everyone else, we have had extra time to reflect on the feedback given to us and to improve our customers’ experiences with energy storage. Regardless of how difficult the current situation is for some in our industry, we see everyone coming out of this having learned more advanced techniques to continue to operate — even in this climate. That said, we’re ready for whatever 2021 has in store, and look forward to our continued growth and innovation in the year to come. We thank you again for supporting our company, and wish you a safe and healthy holiday season.
Bring on 2021!