As Utility Solar Breaks Records, Risks Abound for EPCs and Developers
- Utility,Business of Solar
Utility-scale solar continues its hot streak of record-breaking installations and capacity growth. Industry analysts foresee this trend continuing. However, while the future looks bright for utility solar, there are headwinds beginning to form that can potentially increase risk exposure and negatively impact project value.
Developers and engineering, procurement and construction (EPC) professionals need to ensure they have the right solar solutions at hand to help them power through these headwinds and boost the value of their projects. Let’s take a look at what’s propelling this growth, where the risks lie and how a one-stop, smart solar solution can help.
Utility continues breaking records
Driven by record-breaking growth in the utility solar sector, Q1 2021 saw the U.S. solar market also set a record for the largest first quarter of capacity additions in history, according to the Solar Energy Industries Association. A total of 6 GWdc of solar capacity were installed, representing an increase of 46% over Q1 2020, with utilities accounting for 3.6 GWdc of this growth.
Meanwhile, developers announced 6.2 GWdc of new Power Purchase Agreements (PPAs) contracts, with the total contracted utility pipeline now totaling almost 77 GWdc. Analysts forecast that this sector will continue to see double-digit growth over the next few years as developers build out this contractor pipeline.
In a sign of a potential major market shift, Texas ranked first in total installations. The Lone Star state seized the top spot from California, which has long held that position. With more than 1.4 GWdc of capacity coming online during Q1, Texas has become a hotbed for new utility solar projects -- and residential installations as well.
By 2022, the U.S. Energy Information Administration (EIA) projects growth in large-scale U.S. solar capacity to surpass wind energy for the first time.
Several factors are contributing to solar’s surging growth. On top of continued, solid commercial execution by solar companies, there are a number of pro-solar government policies at play. Congress has once again extended the solar Investment Tax Credit (ITC), allowing for safe harboring to proceed through the end of 2023. This ITC extension maintains a favorable financial environment for utility-scale solar projects, allowing developers to more accurately plot out their pipelines with greater confidence.
And if the Biden administration’s infrastructure proposals are passed, their additional renewable tax credits could mean huge potential growth for utility solar.
Risks and obstacles still restrain solar’s growth
Despite this promising growth environment for utility solar, there are headwinds. And they are blowing directly in the face of developers who must solve for supply chain risks and staffing problems in a tight labor market.
Many projects face global logistics challenges as the global economy emerges from nearly 18 months of pandemic-driven disruptions. The resulting increases in costs for components, labor and freight is boosting risk exposure as developers and EPCs attempt to keep their supply chains intact by juggling new vendors and distributors.
Labor constraints in the U.S. workforce may also raise problems for developers -- especially as more projects become shovel-ready. The Associated Builders and Contractors noted that construction businesses will need to hire one million more workers over the next two years to keep pace with demand. That applies squarely to solar businesses, which are a growing proportion of the construction industry. Remaining competitive will require improving project value to boost margins that can be partly spent on attracting qualified technicians.
How a one-stop solar solution can help
To overcome these obstacles and leverage new opportunities, utility-scale solar developers and EPCs need a solar partner that can help them mitigate these risks and scale effectively.
TrinaPro, our one-stop solution for utility-scale solar, helps EPCs and developers manage risks associated with procurement, interconnection and long-term maintenance. The solution’s innovative bundling of modules and major components optimizes interoperability, which helps improve power generation.
Coupled with the 600W+ Vertex modules sourced from Trina Solar’s state-of-the-art factories in Vietnam and Malaysia, TrinaPro provides EPCs and developers with the high-powered and high-efficient modules needed to get maximum power gains.
Reach out to Trina Solar to learn more about how TrinaPro can help EPCs and developers mitigate risks and take advantage of the record-breaking utility solar sector.
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