The solar industry has proven remarkably resilient in the face of relentless and unprecedented headwinds, such as COVID-19, over the past year, with home solar installations increasing by 7% in 2020. So what does the year 2021 hold for solar? Would this upward trend continue? This article examines the two factors that will shape the industry’s fortunes in the coming year: business trends and technological advancements.
Decline in Prices
One of the most important factors for solar customers is price. The price that installers will deliver is determined by two significant factors: hard costs and soft costs. The costs of components, such as solar panels and solar inverters, are considered hard costs. Non-material charges such as consumer procurement, permitting, and the actual installation of the device are examples of soft costs.
Solar’s hard costs have been slowly declining over the last decade, decreasing by half from 2015 to 2019, as equipment manufacturers improved the efficiency and scale of their operations. In recent years, the fall in hard costs has been a significant cause of lower solar prices.
Soft prices, on the other hand, have remained stagnant as qualified labor is still scarce and the permitting process is still clogged with red tape. In 2021, this has a lot of room for improvement, particularly with the introduction of instant permitting tools like SolarApp (which we discuss further below).
Decreasing solar prices is also being driven by digitization in all sectors of the energy sector, which COVID-19 intensifies. While the solar industry is focused on one of the most cutting-edge innovations, almost every aspect of the solar ecosystem will benefit from bringing anything online. Installers can cut their costs by using new technologies such as remote site visits, mechanical system design, and online sales, which they can then pass on to home and business owners as savings. If the industry moves toward further digitization and streamlined processes, solar prices are expected to begin to fall.
Small profit margins and significant gains
Solar is a highly competitive and expensive industry to compete in, making big profits impossible to come by. To excel in solar, a viable business model and long-term dedication are needed.
Small, local installers and big, national enterprises, in general, are divided into two camps, each of which faces its own set of challenges. Small installers face fierce competition, and COVID-19 wreaked havoc on their finances, forcing others to declare bankruptcy.
Despite these challenges, the industry still has many potentials; according to these companies and their Wall Street backers, a lot of this money is going into an increasingly rising home installation market. Analysts agree that this investment will pay off because it will allow businesses to demand a larger piece of the growing pie. According to SEIA and Wood Mackenzie, home installations will increase by 7% in 2021. Moreover, amid COVID-19’s economic downturn, default rates on solar payments have remained surprisingly low, illustrating the long-term durability of solar as an investment.
The “solar-plus” decade begins.
Combining solar with complementary products such as energy storage systems, electric vehicle chargers, or air source heat pumps (ASHPs), a form of electrified heating and cooling powered by solar, is becoming increasingly popular. This trend toward “solar-plus” makes sense–you would want to get the best out of your solar panel system. Greater electrification lets you save money on solar by extending the life of the electricity produced by your solar panel, lowering the cost of running your various devices. This is also environmentally beneficial, as electrification and solar power cut carbon emissions dramatically.
As electric vehicles (EVs) become more popular and more homeowners and business owners add storage to their solar arrays, we expect this development to begin in 2021. Few solar companies have all, if not all, of these additional technologies, however, those who do (such as Tesla) have found this to be a highly effective approach.
Panels of greater efficiency and wattage
Over the last decade, panel efficiency has gradually improved, and we should expect this trend to continue in 2021. Current panels on the market have efficiencies ranging from 17% to 22%, delivering reliable electricity at a reasonable price. On the other hand, manufacturers and research labs manage to push the envelope, breaking records at a breakneck pace. In reality, a new panel established at the National Renewable Energy Lab (NREL) in 2020 achieved a lab efficiency of 47 percent and a real-world efficiency of 40 percent. These technologies are still in the demonstration stage, but they are an excellent example of the success we can expect in panel efficiency. What does this imply for you? When building a new system, more powerful solar panels mean you can get more “bang for your buck”: the more efficient the panel, the more electricity you will generate from each one.
Manufacturers are hard at work designing more efficient panels in addition to rising panel quality. Trina, Longi, and JinkoSolar, among other significant manufacturers, launched panels with massive wattages approaching 600 W last year. Solar panels generally produce between 250 and 400 watts of electricity. While these super-powerful panels will first appear in commercial and utility-scale programs, this trend will undoubtedly spread across the industry as the technology matures. For solar buyers, these higher-wattage panels will boost your system’s power capacity, giving you more power and, in turn, saving you money.
The main headline in a solar project in 2021 should be “Prepare for Growth.” The industry may have been crushed by coronavirus lockdowns or the economic crisis that ensued, but instead, it expanded by 7%. The industry has proved to be very robust, and with more favorable conditions in 2021, things will only get better. These developments make Solar an excellent alternative for homeowners in 2021 with low costs, stable infrastructure, and sound policy support. Suppose you would like to take this chance. Contact us for a Free Inquiry.
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