Solar Industry Outlook
The cost of grid electricity is poised for a long-term uptrend, and this looks supportive of residential and commercial solar installations. Here are five trends to watch: 1 New Sources of Electricity Demand Factors that are accelerating the electricity consumption outlook include: the rise of datacenters and AI (see figure on top right), electrification of everything from vehicles to buildings and oil & gas infrastructure, onshoring and reshoring of industry, more severe weather patterns, and clean hydrogen (electrolysis). 2 Growing Backlog of Power Projects There are a significant number of new power generation projects that are coming online and that have been proposed in the US. However, growing backlogs suggest that the projects may not be getting approved as fast as developers would like to see (see Figure 5). 3 Transmission Capacity Looking Stretched Aging transmission capacity needs to be replaced, while renewable projects require new transmission routes. According to the US DoE, transmission infrastructure will need to be expanded 60% by 2030, mostly to accommodate renewable energy projects. 4 Declining Rooftop Solar Costs According to the Solar Energy Industries Association and Wood Mackenzie, in 1Q24, installation costs for residential and commercial solar fell by 4% Y/Y and 12% Y/Y, respectively, as module prices fell an average of 45% Y/Y. Costs should continue to look favorable into 2H24. 5 Rooftop Solar Installations to Grow An outlook for rising grid electricity prices and recently falling costs are likely to further increase the appeal of rooftop solar. These factors should set the stage for residential and commercial solar emerging as the fastest-growing solar industry sub-sectors. WTR Solar Sector Research For recent renewable and solar sector content by Water Tower Research, please see Spruce Power Holding Corporation (Initiation of Coverage), Alternus Clean Energy, Inc. (Initiation of Coverage), RE Royalties Ltd. (Management Series), and Revolve Renewable Power Corp. (Fireside Chat). Links accessible in our full report.
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