Coronavirus Infects the US Solar Industry – Can It Recover?

Catherine Lane

Image Courtesy of SEIA | C&I: Commercial and Industrial, EPC: Engineering, Procurement, and Construction

The novel coronavirus, also known as SARS-CoV-2 and the virus that causes the disease COVID-19, first appeared in Wuhan, China in late 2019. Since then, the virus has ravaged the globe, bringing with it a death toll of over 400,000 people, as well as a myriad of societal changes. The coronavirus has caused disruptions in both the global supply chain and the global economy. 

More than 45 million unemployment claims have been filed as a result of the coronavirus, with over 600,000 of the jobs lost belonging to renewable energy workers. The Solar Energy Industries Association (SEIA) predicts that the solar industry could lose up to half of its 250,000 jobs due to coronavirus.

Coronavirus Makes Selling Solar Difficult 

While every sector of the solar industry is being impacted by COVID, residential solar is getting hit the hardest, according to a recent survey conducted by SEIA. Of the 21,467 residential solar workers represented in the survey, 27% have been laid off or furloughed, with a further 42% seeing a reduction in work hours.

Many residential solar sales are made in person through door-to-door sales. Solar salespeople would go from house to house and discuss with homeowners the benefits of installing solar. Once social distancing and stay-at-home orders were put into place, all of that had to change. 

Now, instead of canvassing neighborhoods, solar companies have turned to Facebook for potential customers and are carrying out sales pitches via phone calls or Zoom meetings. Trying to make a sale via social media can be a little trickier than closing the deal face-to-face, which is bringing in fewer new projects. 

Solar installers also worry about the possibility of declining consumer confidence in the face of a recession. As consumer confidence falls, people are less likely to make big purchases, as they are afraid they might not be able to make future payments. This lack of consumer confidence could have a negative impact on the number of sales solar companies are able to make. 

With fewer overall sales, installers can’t sustain the larger sales forces they once could. And with fewer projects in the pipeline, many solar companies could be forced to cut the salaries of the workers they do keep on board. 

Social Distancing Changes Solar Installations 

COVID-19 didn’t just disturb the sales process; it interrupted the installation process too. With fewer projects lined up, there is less of a need for large installation crews. In states where solar installations are considered essential projects, installers are still required to follow the Center for Disease Control’s (CDC) social distancing guidelines. 

Having to keep six feet apart at all times cuts the number of crew members that can be on a site. With fewer people allowed to work on a project site, combined with a drop in new projects being brought in, solar companies are suddenly able to make do with much smaller installation crews, leading to job cuts. 

Coronavirus Delays Could Disqualify Solar Projects for Incentives

One major concern of solar installers throughout the US is missing project deadlines. Coronavirus has already disrupted the global supply chain and is now starting to shut down domestic solar manufacturing companies, like SunPower and Tesla

But supply chain delays are not the only thing that could push projects past their deadlines. Solar permitting and inspections are also slowing because of coronavirus in some areas. 

Project delays are more than just a matter of wanting to be on time. If projects are pushed back enough, they might not qualify for solar incentives, like the 26% federal solar tax credit. The supply chain and permitting delays, and in some cases the inability to work, could push back completion dates, leading to both installers and customers being unable to receive the full 26% tax credit.

SEIA attempted to put an extension of the federal tax credit into the economic stimulus package, along with other solar industry-specific provisions. Ultimately, SEIA did not succeed. This has left solar installers on the edge of their seats and unsure of whether or not they will meet all of their qualifying deadlines.

However, installers can take matters into their own hands by requesting tax credit extensions directly from the Internal Revenue Service (IRS), as SEIA continues to work with Congress on getting relief for the solar industry in future legislation.  

Solar Still Has a Bright Future despite Coronavirus 

The good news is that the coronavirus pandemic should only impact solar in the short and medium term. The solar industry has seen significant growth in the past decade, and projections before COVID suggested that 2020 would be the biggest year for solar yet. 

Recent projections from Bloomberg New Energy Finance that incorporate the coronavirus pandemic show a drop in deployment for 2020 and 2021, but indicate that solar won’t stay knocked down for much longer than that. 

Some believe that the coronavirus pandemic could actually be beneficial for the solar industry. As more people begin working and learning from home, their energy usage will increase, thus increasing their electric bills. Higher home electric bills make solar an even more attractive investment, because the homeowner will see higher savings. Plus, these savings will mean even more in a time of economic downturn, which we are already seeing because of the pandemic. The money saved from solar panels could go towards things like groceries and medical bills instead of electric bills. 

The pandemic could also lead to price drops in solar through changes in solar permitting, making solar accessible to even more people. Streamlined solar permitting has the potential to shave off as much as $1.00 per watt from the cost of solar. That’s about the same as the savings from the federal tax credit. 

These factors bring some hope to the solar industry in an otherwise bleak situation. However, it still remains difficult to predict the long-term outcomes for the solar industry in a post-pandemic landscape, as the state of the economy and the virus is constantly changing. 

Image courtesy of SolarReviews

Solar will still have all of the same benefits that it did before the coronavirus pandemic. It will still save homeowners money on their electric bills and decrease their carbon footprints, making it worthwhile for homeowners to install. These benefits, combined with the falling price of solar, are what led to the solar boom in the past decade and should sustain growth of the industry beyond COVID. 

Knowing this, it’s safe to say that people will continue to install solar panels in the future. However, it will be a rocky few months, or maybe even a year, before solar installations get back on track. This also means that solar jobs that were lost due to COVID have a chance to come back as soon as the solar industry gets back on its feet. 

So, while the immediate future isn’t looking too bright for solar, the industry is predicted to come out on the other side, perhaps even stronger than before. 

Catherine is a researcher and content specialist at SolarReviews. She has strong interests in issues related to climate and sustainability which led her to pursue a degree in environmental science at Ramapo College of New Jersey.

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