Both 2020 and 2021 were banner years for commercial solar energy deployment. That growth trend came to a screeching halt during the first half of 2022 as supply chain challenges, trade disputes and lingering pandemic-related disruptions trimmed the pace of installation.
According to a new market report from the Solar Energy Industries Association (SEIA), commercial solar deployment totaled 1.7 GW between 2020 and 2021 with off-site projects accounting for more than three-quarters of that total.
But the combination of business factors, along with higher prices and tight supplies of labor and materials has led to project delays, particularly for off-site solar.
As a result, off-site installations through June were “far off the pace set in 2021,” SEIA said, with “many 2022 projects pushing operational dates to 2023 or later.”
Through the first half, less than 1.5 GW of new commercial solar capacity was added. For the full year of 2021, more than 5 GW of capacity was installed.
The slowdown is significant as SEIA said that of the 19 GW of corporate solar installed to date, more than half has been installed since 2020.
The industry trade group said that continued declines in the cost of solar have been a primary driver of commercial solar installations over the last decade. For on-site projects in its dataset, the price to install a commercial system has dropped by 51% since 2012.
The report said that installers are seeing increased module pricing stemming primarily from regulatory trade actions that have reduced the availability of module imports and increased module pricing. Pricing for off-site systems has also fallen, with PPA prices for all utility-scale projects in the $16 – $35/MWh range in recent years.
But, in a shift from those trends, commercial solar prices in two of the three size categories SEIA tracks have risen over the last year. It said that pricing for <100 kW and >1 MW systems are at their highest levels since 2019 and 2018, respectively.
It said that installers are seeing increased module pricing stemming primarily from regulatory trade actions that have reduced the availability of module imports and increased module pricing.
In addition, hardware costs have increased due to widespread inflation. Meanwhile labor costs have risen “significantly” due to higher demand and in line with what SEIA said are “structural changes in the U.S. labor force” brought on by the Covid-19 pandemic.
The report’s findings were based on system-level data from around 48,000 commercial solar systems, which it made up around 70% of the total installed capacity through June.
Growth in ground mountsThe report said that a majority of systems use roof mounting systems, but that ground mounts are becoming more common as system sizes increase. It said that around 23% of systems use ground mounting equipment, up from 16% at the end of 2018.
It also said that more than 94% of off-site corporate capacity uses single-axis trackers, in line with a decade-long trend away from fixed-tilt systems. Fixed-tilt systems are now used primarily in smaller off-site systems that lack the economies of scale to justify the additional expense of adding trackers.
Corporate leadersCommercial solar now accounts for 14% of all installed solar capacity in the United States, according to the Solar Means Business 2022 report. It named Meta, Amazon, Apple, Walmart and Microsoft as the top five corporate solar users in America.
Meta increased its installed solar capacity from 177 MW in early 2019 to 3.6 GW. Target remained as the top onsite corporate solar user, while Microsoft joined the top 10 by installing 479 MW of new capacity since 2019.
The report said that Walmart’s set of on-site and off-site solar has kept the retailer in the top 5 for the last decade. Around 46% of its global electricity needs were supplied by renewable energy as of 2021.
The report said that Microsoft has installed 479 MW of new capacity since 2019. The report said that companies like Intel, Google, Switch and Digital Realty are using solar energy at data center facilities. In addition, food and beverage companies like Ab Inbev and Starbucks, health care companies like Kaiser Permanente and DaVita, and other top brands like Home Depot and T-Mobile were named as top 25 corporate solar users.
The report also said that fully 2 GW of the 10 GW of off-site commercial solar is installed in Virginia, where demand by tech companies and data centers is driving much of the demand. The state’s leading commercial solar users included Meta, Amazon, Apple, Microsoft, and Digital Realty.
The report said that 23 U.S. companies have installed at least 100 MW of solar capacity, up from 11 companies in 2019. Eighteen of the top 25 companies ranked in the report are pursuing 100% renewable energy or carbon neutral goals.
Back to growth?SEIA said that total commercial solar installations are expected to double again over the next three years with nearly 27 GW of off-site corporate solar projects scheduled to come online by 2025. This represents nearly a third of the total contracted solar pipeline.
The report said that third-party ownership remains popular despite lending practices that have improved in recent years. It said that increased underwriting costs often make commercial loan offerings less attractive than in the residential sector. It also said that many companies prefer to account for their electricity expense as an operating cost and not as a capital cost.
Even so, customer-owned systems have grown in market share from 52% in 2019 to 68% through the first half of 2022. It said that financiers have become more comfortable with the commercial solar space and that declining system costs have reduced the amount of capital expense associated with system ownership.
