2021: Forward Progress for the Clean Energy Economy
As we move into a new year, all signs on the demand side point to a bull market for solar. The late December stimulus deal which included an extension of the Investment Tax Credit (ITC) was the cherry on top of a year where the solar market grew despite many challenges in the larger economy.
We won’t have final US installation numbers for a few months, but what is clear is that solar became what Mercom Capitol CEO Raj Prabhu calls an “investment haven” in 2020. As a sign of this, the stock valuations of many solar companies are off the charts, and the Invesco Solar ETF nearly tripled in value during the year.
2021 looks like it will be a very good year for the solar market as well. But don’t take our word for it. According to the US Department of Energy’s Energy Information Administration (EIA), we are going to install 15.4 GWac of large-scale solar this year, with another 4.1 GWac of smaller installations. These numbers are likely conservative, as EIA is not exactly a solar advocacy organization. Texas alone is expected to host 28% of the big solar that is coming this year.
And it’s not only solar. EIA is also expecting a near-doubling of the current capacity of grid-tied batteries to more than 4.3 GWac. In fact, 2.1 GW of that is already under construction.
Policy indicators are also positive. In addition to a wide range of state-level action, the incoming administration is pledging to move to 100% zero-carbon electricity by 2035, which would mean dramatic growth for the already booming solar and wind markets. And even if this particular policy does not succeed, there are others that will.
One important step will be building the transmission lines that are needed to move electricity from all the wind and solar that is going online, the lack of which has been driving up interconnection costs. Here indicators are good, as both the incoming administration and the new chair of the Senate Energy and Natural Resources Committee have identified this as a priority.
All of this momentum on the demand side means that production will have to step up. And while there are some significant announcements—such as Jinko Solar’s massive 20 GW cell factory planned in China—there are still issues with polysilicon, glass and EVA for back sheets which could continue to put upward pressure on module prices.
Too much demand is perhaps a good problem to have, and 2021 means growth on all fronts for the solar industry and market, for batteries, and for transmission. We are entering not just a new year, but a new world.