Daily on Energy: Clouds over the solar industry

The Solar Energy Industries Association and Wood Mackenzie released a report last week on how the market fared in 2021, and it concluded that solar prices increased for the first time in more than a decade. Utility-scale solar projects experienced an 18% increase in prices.

Beyond that, a third of all such projects that were supposed to be up and running by the last quarter of 2021 are now delayed to 2022 or later, and Wood Mackenzie has reduced its forecasts for capacity additions by 11 gigawatts, or 19%.

“The situation shows us that we can no longer rely on hostile nations that don’t have our best interests at heart,” Abigail Ross Hopper, president and CEO of SEIA, said during a media briefing yesterday. “Solar and storage represent the best opportunity we have to power our country with clean, local, and reliable energy.”

What’s in play: The factors affecting solar deployment are much the same as those affecting the entire economy. Inflation, driven by higher demand for products, as well higher fuel, shipping, and input costs are making projects more expensive.

SEIA is lobbying hard for Congress to pass legislation with multi-year investment and production tax credits to provide certainty for the industry in the face of higher prices.

“The timeline for contracting, procuring, and building a solar project is a couple of years,” Hopper said. “If you sign a contract … two or three years ago with assumptions built in about what the price of shipping will be, what the price of steel will be, what the price of panels and then you come time to build it and purchase all those things and those have gone up 19%, 20%, or they’re unavailable for some reason, it means that the project really can’t move.”

But the industry is also facing a trade regime which it says is making manufacturers of solar cells and modules in Asia particularly wary.

President Joe Biden just extended Trump-era tariffs on solar imports, which SEIA wasn’t too keen on but treated publicly as a “balanced solution” for excluding bi-facial panels and for increasing the tariff rate quote for solar cells.

What’s contributing more to volatility, SEIA says, is the recent petition by California-based solar manufacturer Auxin Solar requesting the Commerce Department investigate whether Asian cell and module manufacturers are violating anti-dumping rules on Chinese products. The petition asks Commerce to put new duties on cells and modules from Malaysia, Cambodia, Vietnam, and Thailand, which SEIA said account for 80% of imports.

Hopper referred to a similar but ultimately unsuccessful petition asking Commerce to take similar action last year, which SEIA has said slowed imports simply in being filed with the department.

“It’s hard to overstate what it would mean — just the initiation of an investigation. What we saw last time is that a lot of manufacturers overseas stopped producing,” Hopper said. “You can’t take that kind of risk. That’s just not a rational business risk to put product on the water and send it here when you don’t know what it’s gonna cost when it gets here.”

Business was still good last year: Despite its challenges, the solar industry enjoyed record deployment last year, having installed a record 23.6 gigawatts of capacity — a 19% increase over 2020. Utility-scale additions added up to 13 gigawatts.

Moreover, the Energy Information Administration projected earlier this year that solar will account for almost half of all new electric generating capacity additions in 2022, more than double the nearest source in natural gas, and EIA stuck with that projection in its most recent Short-Term Energy Outlook earlier this month.

“It’s sort of a tale of good and bad, right, that we broke records again in 2021 with regard to deployment, and prices rose across all market time,” Hopper said yesterday. “It’s sort of this odd narrative about, it’s both good and incredibly challenging at the same time.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

RASKIN OUT: Sarah Bloom Raskin pulled out of consideration to serve as the Federal Reserve’s top bank regulator yesterday. The announcement came just two days after Sen. Joe Manchin joined Republicans in saying he would oppose her nomination, effectively blocking her path to confirmation.

“Despite her readiness—and despite having been confirmed by the Senate with broad, bipartisan support twice in the past — Sarah was subject to baseless attacks from industry and conservative interest groups,” Biden said in a statement yesterday.

Raskin’s nomination faced intense scrutiny from Republicans and oil and gas advocates, who argued that she might use her Fed post improperly to combat climate change, or to choke off credit to oil and gas companies. (Raskin rebutted that assertion in her confirmation hearing last month.)

Manchin announced his opposition earlier this week, citing remarks she has made that are skeptical of fossil fuels, and emphasizing pressure that high energy costs would have on the economy.

PSAKI REBUFF 2.0 ON MANCHIN’S DPA PROPOSAL: Press Secretary Jen Psaki indicated again the White House isn’t interested in using the Defense Production Act to more quickly build out gas infrastructure as a means of reducing energy prices, something Manchin endorsed last week.

“In terms of the building of a pipeline, that does not sound like it’s an immediate solve,” Psaki said yesterday.

Psaki had already said from the podium that doing such a thing “would basically be providing money to oil companies to do something that they already probably have the capacity to do” (which, notably, is basically the line of argument Manchin frequently employed in opposition to the earlier “Build Back Better” proposal’s clean electricity payment program.)

Separately, Biden is also being pressured by a host of green groups to invoke the DPA for the purposes of manufacturing renewable energy and energy saving technologies in response to the rising prices.

LNG EXPORTS DOWN IN FEBRUARY: Shipments of U.S. LNG fell last month after an especially strong January.

Exports averaged 10.9 billion cubic feet per day in February, a reduction from January’s average of 11.2 Bcf per day, according to a new market review by the American Gas Association.

But the EIA still projects U.S. LNG shipments will enable more record-breaking this year and reach an average of 11.3 Bcf per day, or a 16% increase from 2021.

That forecast comes as Europe’s demand for natural gas imports have skyrocketed as supply from Russia has become doubtful. At least half of U.S. LNG shipments went to Europe last month, according to vessel tracking data released by Refinitiv, and Biden worked with European allies to help find additional LNG suppliers beyond the U.S.

CHERNOBYL STAFF WORKING AT GUNPOINT TO STAVE OFF DISASTER: Three weeks after Russian troops seized control of the Chernobyl nuclear power Ukraine, more than 200 nuclear technicians and other staff have been held hostage inside the facility––underfed, exhausted, and forced to work around the clock at Russian gunpoint.

Technicians and support staff are approaching 500 hours on the job — “nonstop” work that is punctuated only by short naps on chairs in front of machinery or atop piles of clothes next to their workstations, according to a report from the Wall Street Journal, the first on conditions inside the complex since it was captured by Russian troops last month.

They are allowed only one-minute calls to family members, during which they have recounted their extreme fatigue, nausea, and dizziness. “I didn’t recognize his voice,” said the wife of one Chernobyl employee. “I could tell someone was standing behind him. Very short phrases.”

The conditions at Chernobyl––including the lack of reliable communication with employees–– have prompted mounting concern from the UN’s nuclear watchdog agency, which said Sunday that it had been informed staff had stopped safety repairs and maintenance checks due to “physical and psychological fatigue after working non-stop for nearly three weeks.” Read more from Breanne here.

NEW REPORT SEEKS TO MAKE THE CASE FOR CARBON PRICING: A new report released this morning by the GOP-led Climate Leadership Council argues that economy-wide carbon pricing is “essential” for achieving energy grid reliability as the U.S. moves to a low-carbon economy. The report, co-authored by former FERC Chair Neil Chatterjee and Council CEO Greg Bertelsen, highlights three key motivations: 1) It is technology- and location-neutral, 2) it fosters “economy-wide” innovation, and 3) it sends “steady, predictable” price signals –– thus providing investors, grid operators, and power system planners better data to forecast supply and demand trends

“Carbon pricing supports long-term planning,” Chatterjee said. “A steadily-rising price on carbon provides a predictable signal that gives companies the clarity they need to make necessary investments in the energy system and incorporate new technologies into the grid.” Read a copy of the full CLC report here.

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Calendar

THURSDAY | MARCH 17

10:00 a.m. The Senate Energy Committee will hold a confirmation hearing for Kathryn Huff, Biden’s nominee to serve as DOE’s assistant secretary for nuclear energy.

11 a.m. The House Natural Resources Subcommittee on Oversight and Investigations holds a hearing on ongoing oversight efforts of the Runit Dome, as well as U.S nuclear legacy in the Marshall Islands.

1:00 p.m. The House Subcommittee on Water, Oceans, and Wildlife will convene to discuss five pending bills on fishing, wildlife.