Supply Chain Woes Slow U.S. Solar Boom

Trade and supply chain barriers continue to slow progress in U.S. solar power expansion, despite the Inflation Reduction Act (IRA) which was designed to boost clean energy capacity rollouts, a quarterly report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie showed on Tuesday.

The United States added 4.6 gigawatts (GW) of new solar capacity in the third quarter of this year, down by 17% compared to the same period of 2021, the U.S. Solar Market Insight Q4 2022 report found.  

As a result of supply constraints, the utility-scale, commercial, and community solar markets all experienced sequential declines in the third quarter. The residential solar segment is less directly impacted by existing trade issues and saw 1.57 GW of new installations, up by 43% compared to the third quarter of 2021, according to the report.

“America’s clean energy economy hindered by its own trade actions,” SEIA president and CEO Abigail Ross Hopper said in a statement. 

“The solar and storage industry is acting decisively to build an ethical supply chain, but unnecessary supply bottlenecks and trade restrictions are preventing manufacturers from getting the equipment they need to invest in U.S. facilities. In the aftermath of the Inflation Reduction Act (IRA), we cannot afford to waste time tinkering with trade laws as the climate threat looms.”

Supply chain constraints have worsened this year as power plant developers are struggling to get their hands on solar panels due to new U.S. legislation banning imports of products manufactured using forced labor in China.

The U.S. enacted in June the Uyghur Forced Labor Prevention Act (UFLPA), which bans products manufactured using forced labor in China’s Xinjiang Uyghur Autonomous Region. The Xinjiang Uyghur Autonomous Region (XUAR) is home to half of the world’s polysilicon, which is used in solar panels manufactured in many other countries.  

Under the Act, companies should provide a track record of the supply chain of solar panels and other equipment to ensure that they haven’t been manufactured using forced labor.

“It has proven more difficult and time-consuming to provide the proper evidence to comply with the UFLPA, further delaying equipment delivery to the U.S.,” said Michelle Davis, principal analyst and lead author of the U.S. Solar Market Insight Q4 2022 report.

By Michael Kern for Oilprice.com 

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