2020 was a record setting year for the US solar industry.
A joint report released in March 2021 by the solar industry’s lobbying group (SEIA) and the consulting firm Wood Mackenzie Power & Renewables states that in 2020 the industry installed 43% more solar energy capacity than it did in 2019. 19.2 gigawatts of solar was installed, setting an all-time annual record of new capacity put online. For reference, each gigawatt of installed capacity approximates to $1.5bn, and so approximately $28.8bn of capital poured into solar energy infrastructure in 2020.
The report goes on to state that wind and solar combined represented 81% of all new power assets installed in the United States in 2020. Solar comprised 43% of new installations, and wind 38%. By most every measure within the report, the solar industry is growing faster than it has grown before. According to the report, the only part of the solar industry that contracted last year was on-site commercial solar installations, which is most closely tied to the economic health (or lack thereof) of commercial real estate, which is suffering from an uncertain future in the wake of the pandemic.
Without a change to current federal law, the joint report estimates the solar industry will more than quadruple over the next 10-years, with an estimated $486bn of new projects slated to be developed by 2030. However, this forecast may be overly conservative when you consider ongoing efforts in Congress to pass legislation that will further boost the industry’s growth.
In February of 2021, the Chairman of the House Ways and Means Subcommittee Mike Thompson (D-CA-05) introduced the GREEN Act, which in his own words is “a sweeping bill that will use our tax code to help tackle climate change”.
Furthermore, in March 2021 three Democratic Senators introduced their own bill in the Senate that will allow for the refundability of the solar energy tax credit. US Senator Tom Carper’s (D-DE) press release on the bill’s introduction has him quoted as, “the COVID-19 economic crisis created an immediate crisis in clean energy financing, stalling current and future clean energy projects and leaving over 400,000 Americans who once had a job in the clean energy sector unemployed today”.
With President Biden’s domestic policy now focused on an infrastructure bill, we think it is more likely than not that there will be changes to the tax code that will favor the solar industry. Blue Rock will be monitoring these developments and we will be working with our clients to position ourselves for continued investment success.