Project developers across the country are seeing the ripple effects of supply chain constraints squeezing both the solar and storage sectors.
Multiple factors are contributing to the problem, experts say, from upstream shortages in labor and equipment parts to more intermediate issues like transportation backlogs and the unavailability of shipping containers. On the storage side, developers have been experiencing tight supply conditions that make it difficult for them to access lithium-ion batteries, as well as other equipment they need to build facilities. The solar sector, meanwhile, has witnessed labor crunches at ports, nautical shipping challenges and other constraints that have contributed to a demand-supply imbalance.
U.S. solar installations were lower than expected in 2021, with gigawatts’ worth of projects pushed into 2022 or later due in part to supply chain and logistics challenges, according to a March report from the Solar Energy Industries Association. About a third of solar capacity scheduled to come online in the fourth quarter of 2021 was delayed by at least one quarter, the report found. Furthermore, developers have postponed at least 8% of the planned capacity for 2022 to 2023 or later and canceled at least 5%, it said.
The project delays and cancellations are not only due to delays in getting products that go into developing a solar project, said Shawn Rumery, SEIA’s senior director of research — they’re also because prices have been going up very quickly at the same time, thanks to those supply chain constraints and inflationary pressures.
“It’s putting a lot of price pressure on developers, and just the general uncertainty there is creating a difficult environment in terms of not only developing projects that you already have in your pipeline, but procuring new projects as well,” he added.
COVID-19 aftereffects, raw material shortages and logistical challenges
The aftereffects of disruptions caused by COVID-19, and the resulting temporary shutdown of manufacturing in various countries, have likely had the most impact on the supply chain, said Adam Walters, a lawyer with Stoel Rives. In 2021, many U.S. renewables projects were pushed back because of delays in equipment supplied primarily from Asia, and some of these delays continue today, albeit at lower levels.
While supply has been constrained, demand has grown, Stoel Rives partner Morten Lund added. The big uptick in demand for solar panels and batteries over the last couple of years “makes it look like the supply problem is bigger than it is because demand is widening,” he said.
“There was just an explosion of demand — a lot of that was led by the electric vehicle market.”
Senior energy storage research analyst, Wood Mackenzie
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