Top 10 Solar Energy Trends in 2021
One of the most impactful solar energy trends has been its growth in just the last few years. Since 2019, solar is the fastest-growing sector of renewable energy. While it generated 2.3% of total U.S. electricity in 2020, it accounted for 43% of all new electrical-generating capacity.
What does that mean? Well, basically, nearly half of energy-generating projects are solar. That’s good enough for first place among all technologies for two years running.
That sounds great, but what’s driving that growth? How will solar continue to impact electrical contractors? How do you even take advantage of this incredibly fast-growing industry?
Here’s a look at the top 10 solar energy trends happening right now and what you need to know about where solar is headed in 2021.
1. Record-breaking solar installs
Do you want the good news or the bad news? One of the first solar energy trends we’re tracking happens to have a little bit of both.
In 2020, the U.S. broke records in both the steepest drop and the biggest bounce back in residential solar installs. That’s understandable, given how COVID-19 impacted, well, just about everything.
Residential installs dropped by 20% during the pandemic’s stay-at-home orders, but the great news is that by the end of the year, solar bounced back in a big way, adding 19 GW of total solar power by year-end.
For 2021, Robbie McNamara, our National Renewables Business Development Manager, expects this trend to continue.
“A big part of that bounce back had to do with the ITC,” he said. “There were no guarantees it’d be extended at the end of 2020, so many people wanted to take advantage of the ITC before it was originally supposed to be reduced.”
These recent solar jobs are moving ahead in 2021, and any delayed projects meant to be completed in 2020 are being fast-tracked. Many analysts expect solar to rebound back to 2019 highs as renewable energy looks to outpace coal in terms of total energy production. Talk about record-breaking.
2. Batteries are more affordable than ever
Among all solar energy trends, this one might impact the industry the most.
Solar might be the fastest-growing industry in new energy generation, but battery storage is one of the fastest-growing asset classes. In fact, over 170 GW of new renewable capacity is scheduled for construction by 2025.
There’s a big reason for that level of growth. Energy storage is seeing huge advances in efficiency and affordability. Now, energy storage is not just an economical addition for solar installs. It’s also the most flexible, allowing energy storage to provide multiple functions, like ancillary grid services and on-demand power.
McNamara believes that batteries are the natural progression to advance solar energy.
“As batteries have become more efficient and more affordable, the benefits they offer outweigh the means,” McNamara said. “From a utility perspective, batteries help stabilize the grid and reduce wasteful production. From the homeowner perspective, batteries allow the homeowner to store power for power outages and/or peak shave when utility rates are at their highest.”
That’s probably the best part about the solar battery growth. We’re seeing a higher market share of residential battery installs, a true benchmark of affordability and efficiency.
According to Wood Mackenzie and the U.S. Energy Storage Association, new battery-storage capacity in the U.S. doubled in the third quarter of 2020 alone. Better yet, 23 GW of energy storage will be paired with solar in utility-scale operations, representing over 25% of all contracted projects.
While this pairing of new solar installs and battery storage systems is still new, the growth over the next five years should be huge. The SEIA predicts that by 2025, nearly 25% of all behind-the-meter solar systems will be paired with storage, compared to under 6% in 2020.
3. Solar panel efficiency like we’ve never seen before
Most years, like any technology, solar panels see a modest increase in efficiency. This year, the average panel conversion efficiency has skyrocketed from 15% to well over 20% in most modules.
Okay, that might not sound like much, but when adjusted over the lifespan of a panel, that 5% efficiency boost drastically increases your ROI and helps repay the upfront installation cost much sooner. Usually, most silicon-based solar panels cover their cost within 2 years. Now, with efficiency ratings above 20%, payback time has reduced to less than 1.5 years.
The good news is that it’s not just efficiency that’s improved in recent years, but also the power rating. The latest efficiency jump allowed standard, 60-cell panels to increase from 250W to 370W. Like most solar energy trends, as efficiency improves, we should see even larger power output ratings in the near future.
4. More diverse supply chain
It’s no surprise that a lot of PV panels and inverters are manufactured overseas. It’s also no surprise that COVID-19 painfully showed the weakness behind our global reliance on a few major manufacturers.
The good news is that U.S.-based module manufacturers are increasing their market share, achieving a 10-year high of 19.8% in 2019. However, the biggest challenge remains price competition. It simply costs more to produce solar materials in the U.S. That cost inevitably passes down to the consumer.
The better news is that there is light at the end of the supply chain. Awareness around our end-to-end solar supply chain is increasing, and 2021 could mark a turning point in how we source modules and inverters.
For solar contractors, there’s something you can do to help. McNamara stresses how important it is for contractors to communicate with their own suppliers.
“It’s critical to schedule and forecast with your supplier as much as possible,” he said. “This gives suppliers like us more time to navigate shortages and logistical challenges. Just because we have plenty of a product today, doesn’t mean that lead times to replenish stock won’t continue to get longer and longer.”
After all, a supply chain runs both ways. Solar energy trends like this one will shape the market for years to come.
5. Solar installs might get more complicated
With so many advances in solar technology, homeowners and business owners now have even more features and configuration options. That means a bigger headache for electrical contractors — unless they know what they’re doing.
Thanks to integrated solar and storage systems, installers need to be comfortable with building electrical wiring, CAT 5/6 wiring, various wireless communication solutions, desktop and cellphone applications, and dozens of inverter/battery configuration options.
6. Oversize, overbuild
One of the most influential solar energy trends is going to be how much generating capacity building owners and homeowners want installed. Today, it’s not just about how much energy a home or business consumes right now, but how much they might consume in the future.
After all, solar is a long-term investment, so it’s important to project future energy use — especially as electrification takes over homes and businesses. With a rapid increase in building and home electrification that extends to HVAC, heat pumps, and even electrical vehicles and charging stations, electricity consumption will inevitably increase.
It’s best to overbuild for it today and oversize the energy system, rather than try and add onto it tomorrow.
7. Solar-powered EV chargers
Speaking of electric vehicle chargers, expect to see EV-charging capabilities as one of the most requested features for solar and battery installations.
The same 40-amp backfeed circuit breaker needed for a standard solar install can also feed an electrical vehicle charger. In fact, some new inverters actually have a dedicated connection for EV charging, which lowers the cost while simplifying the wiring, permitting, and controls for solar contractors.
8. Commercial and utility-scale solar growth
Investment tax credits (ITC) are responsible for a lot of growth in solar, and in December 2020, the ITC window was extended through 2022. Now, owners of new residential and commercial solar qualify for a 26% credit based on the cost of their system.
With such a limited window, more and more companies should make the transition to clean energy sooner rather than later. Not only does this give companies the chance to make sustainable choices, but it also builds consumer trust and a greener future for their business operations.
“Solar is taking the entire nation by storm for a few reasons,” McNamara said. “Obviously tax credits and incentives make it an attractive investment. But, over the past several years, the big push on climate change, increased energy costs, and blackouts caused by unstable grid conditions have affected most of the country.”
“People today are a lot more educated and ‘in the know’ of how important sustainable energy is for us presently and for our future generations,” he continued. “I don’t think this industry will ever see a downturn and will continue to ride an ongoing upward trend.”
9. Solar may be #1 three years running
As we mentioned before, solar is one of the fastest-growing forms of renewable energy, accounting for nearly half of additional energy-generation capacity.
Even under a business-as-usual scenario, the U.S. solar industry will install more than 324 GW of capacity over the next 10 years. That’s four times the current amount of solar capacity installed today.
Thanks to declining prices, there’s nothing business-as-usual about solar energy’s future.
Since 2010, the cost to install solar has dropped by more than 70%, making it one of the most impactful solar energy trends of the decade. This cost reduction has allowed solar to deploy in new markets all over the U.S. As of Q4 2020, the cost of solar installations was at its lowest level in history.
To put that in perspective, the average-sized residential system would cost $40,000 in 2010. Today, the average residential install is about $20,000. Even utility-scale solar ranges from $16/MWh to $35/MWh, which makes it competitive with all other forms of generation.
10. Solar will be an economic engine
As of 2019, nearly 250,000 Americans work in solar across 10,000 companies in every U.S. state. That’s more than double the number in 2012.
Out of those 250,000 Americans working in solar, 150,000 jobs were directly involved in solar installation.
While most installations take place in California, Texas, and Florida, solar is actually seeing an increased market share everywhere.
Today, solar is a 50-state market, generating nearly $20 billion of investment in the American economy. If you’re an electrical contractor, solar is where you want to be.