As reports of COVID-19 started emerging from China late last year, the American solar power industry started worrying about procurement of products. Since Asia is one of the biggest manufacturers of solar panels, among other equipment required to install, these have been legitimate concerns. Residential installations were predicted to have a good year until the pandemic hit and caused several supply chain bottlenecks.
However, it turns out that the industry’s most significant setback is falling demand. “When the virus first hit, everybody was like, ‘Oh, my God, Chinese manufacturing,’” says Tara Narayanan, a solar analyst at BloombergNEF. “Now the question is Will global demand collapse?”
As lockdowns are initiated across the globe, homeowners are wary of having panels installed in the current scenario, even if someone already agreed to buy or lease it before the crisis. Already, some installations have been postponed, others cancelled. Based on applications for loans and leases and other factors, solar manufacturer SunPower Corp. said late last month that second-quarter residential demand could be down between 10% and 30% — with California and New York at the high end of that range.
Analysts are predicting a further fall in residential installations in the current year, which will be a big setback for a sector that’s key to fighting climate change and that’s been on the cusp of transitioning from a niche in many markets to become a neighbourhood mainstay, especially during a peak season like summer. Social-distancing practices have interfered with the market’s most successful strategies; door-to-door sales at a time when selling just got a lot harder, since the global economy is suffering another recession and millions are out of jobs. Morgan Stanley has predicted that U.S. solar volumes in the residential sector may fall by 48% year over year in the second quarter, 28% in the following quarter and 17% in the fourth quarter.
It’s not just a matter of sales that are lowering residential installations. Project permitting has been kept blocked by locked-down cities and counties that don’t allow government employees to approve installations from their own homes.
Some companies and analysts are optimistic that demand could rebound after a weak second-quarter if the pandemic is stanched in the next few months. Roth Capital Partners published a note last week suggesting that a shift to online sales could help reduce installers’ marketing costs, which “will help the industry return to its prior growth trajectory faster than expected.” And there’s still interest in home solar and batteries, says Tom Werner, chief executive of SunPower.