Last Updated on November 1, 2023 by admin
How U.S. Solar Energy Market is Affecting By Inflation In 2023?
Solar energy companies are vastly growing around the world. Many people are fascinated by the idea of renewable energy and fewer electricity bills. Despite all the hype, the solar panel system market has faced a gap in 2021. The question raised here is why technology, so rapidly growing, had to face a gap?
US solar energy market is one of the largest solar panel installers market. What are the possible reasons the US market could not meet the demand and supply calls?
Here are some of the reasons that will help you understand the market insights of solar panel systems in the US.
Covid has affected many businesses in multiple ways. Although the digital market was at its best, the trend shift has created a hole in the market. Many factories that manufacture solar panels had to be closed due to lockdowns and rising covid cases. There were not enough solar panels to meet the demands of people all around the US, another reason was online meetings.
In a business like this, the solar installation companies faced a setback. Installers were used to physical meetings but had to shift to online meetings. The process got complicated and elongated. Many people lost their jobs and were not able to afford the solar panel system due to high inflation.
Shortage of the material:
China is the biggest manufacturer of solar panels in the whole wide world. They handle almost 50% (or more) manufacturing and exports of solar systems. In 2020, all the manufacturers almost stopped manufacturing due to covid, floods, explosions, etc. But China’s factories remained fully functional until the start of 2021.
At the beginning of 2021, they faced a shortage of glass and later EVA. Both of these materials are important for panel production. We also had to face a shortage of semiconductors used in micro-inverters. The material shortage caused the manufacturing process to slow down.
Cost of material
One small change can affect things vastly. The factors like material shortage, delay in manufacturing and covid, caused the material cost to rise by 16%. Essential products like steel, polysilicon, and mono silicon are talking to the sky.
The overall stocks of the market dropped by 13% because of the rise in prices of the Solar panel system. The cost of aluminum and copper material used in racks and wire modules has also elevated by 300%.
Apart from the cost of material the installation prices are also increasing. Solar companies are reluctant to buy solar panel systems because they are waiting for the costs to drop, but that’s not happening anytime soon.
Most of the manufacturers are in South East Asia. The expensive shipping costs from Asia to the USA have increased drastically. Shipping cost is another reason solar panel companies are not ready to buy panels. If the companies are not buying, there will be a conflict in demand and supply.
The US does not have many manufacturing factories to produce panels as required. They have to import a large amount of solar material from other manufacturers.
Asian manufacturers have also faced some limitations. They can not engage many employees as needed for rapid production. Human rights abuse is an issue in the region.
In addition to the problems discussed above, multiple small issues need addressing. The increase in prices makes it hard for renewable energy to compete with other conventional power sources. People are reluctant to pay a large sum of money at a single go, they are comfortable with chunks of payment.
The prices also vary from area to area, which is why people start comparing the rates and wasting time thinking. Weather conditions also play an important part in the cost of solar panels.
Educating people on the advantages of the solar panel system is still a challenge. People still oppose solar power projects and see them as a threat to the surrounding. Many locals opposed the Nevada project, which was about to be the largest project in the US.
Trade barriers between China and the US have also promoted the slow growth of renewable energy. The anti-dumping tariff has caused many manufacturers to think twice while sending packages to the US.
Developing more Solar panel Factories
Multiple development projects are trying to develop more factories in the US for rapid growth and production of green energy. If the US market gets successful in developing factories, there will be fewer imported panels and fewer shipping costs. The US is also manufacturing material used in the assembly of solar panels. This means the supply chain issues will also resolve soon.
Improving the efficiency of the solar panel system
Most of the sunlight that strikes the panels is wasted, so the experts are trying to create a technology that is more energy absorbent. Thin- films are used in solar power systems to grab more power. More efficiency means lesser bills and more power.
Educating people about the pros of solar energy
Educating people on the advantages of solar energy and solar battery storage is important. People feel shy to adopt new technology but we can take the necessary steps to educate them. When people see how solar energy benefits them in day-to-day activities it will mend their minds. People should also be educated on the type of solar panel.
Government’s Role in promoting Renewable energy:
The US government is already taking the necessary steps to promote renewable energy. They have introduced incentives for people. In addition to the incentives, the US government should take steps to gain the trust of the exporters.
State Solar Incentives & Rebate Programs for Homeowners
Although due to high solar prices and global inflection, it is not easy for a homeowner to invest much instantly. But, for helping homeowners in switching to solar, state wise solar incentives and various rebates programs are available.
Like, if a homeowner goes solar in 2022, there is a 26% investment tax credit rebate program available. This incentive program aims to support such homeowners who want to shift to solar power.
Keep in mind that such as inflation, this 26% solar tax credit is expected to drop by 23% in coming year. So, if you want to avail this 26% rebate, you should surely plan your solar installation right now.
Apart from this, there are various other rebate programs available. You can check the applicable ones according to your state.
Solar Financing Options to support Homeowners in Solar Installation
As high inflation rate & increasing prices are barrier for people who want to make big investments. Same like other industries, solar panel market is facing the same challenge. There are many homeowners who want to switch to solar power and save on high electricity bills.
For helping homeowners in their solar panel installation, there are various Solar Financing options available. With solar financing opportunities, a homeowner can switch to solar even as low as $150 or with 0% APR.
Also, Solar Leasing is the best opportunity for such homeowners who don’t have enough in-hand cash to buy solar in this inflation time. With solar leases or loans, a homeowner can afford to shift to solar with comfort. With Solar Lease financing, the homeowner signs a Power Purchase Agreement (PPA) which states that he is not the owner of the installed solar. In this scenario, the homeowner doesn’t even need to bear any installation cost. The solar provider pays the overall upfront cost instead of who owns the system also.
If a homeowner goes solar with solar lease, he can utilize all the power solar generates. Also, he can save his utility bill with a net metering option. In exchange for all the benefits, he only needs to pay some monthly lease amount to the PPA company that owns the solar panels.
Overall, if we look around, it can be observed that inflation is just not the issue of United States. Instead, it is a Global Challenge nowadays. Also, it is not about only solar industry which is facing high prices or low supplies challenge.
Despite all, if we analyze, going solar is still a worthy investment for a homeowner. This is because electricity prices will keep increasing in coming time which will increase your electric bills also. Although going solar requires big investment, but it will make a homeowner grid independent for your future. A homeowner can save a lot by shifting to solar even in any season. Also, adding a battery storage with your solar panel system can end up your power outages worries. You don’t need to stay in dark during long blackouts or grid down time.
Also, solar incentive programs and solar financing options are available for helping homeowners to invest in solar for a secure future.
The main reason for fluctuation in solar companies are the shortage and increased price of the material. All the minor issues discussed above also contribute to inflation in the market. The solar experts are keen and attentive to solving this problem. We are hopeful that by the end of 2022, we will be able to resolve all the issues.
Despite all the fluctuations in the market solar energy companies are still growing but just not at the rate we predicted. Start exploring solar technology and try to educate others around you as well. The world is turning green and we should play our part too.