Solar panel pricing has been dropping since Q3 of 2023, providing advantageous timing to evaluate solar for commercial and industrial businesses. Several factors are driving the price decrease, with global oversupply being foremost among them. Advancement in module power output, decrease in module costs, and the Inflation Reduction Act (IRA) demonstrates a stronger business case than we have seen in the last 5 years within the commercial/industrial sector.
HOLT Renewables ran an economic analysis evaluating turnkey project cost in 2019 & 2022 vs. project cost today:
- 1.339MWdc Ballasted Rooftop NV, initial analysis completed in 2022
- 9.47% DECREASE in full turnkey EPC pricing for 2024
- 492kWdc standing seam Rooftop TX, initial analysis completed in 2019
- 8.7% DECREASE in full turnkey EPC pricing for 2024
Imbalances in global solar modules supply and demand have put significant downward pressure on module pricing, with average global pricing falling 30-40% from the first quarter to the third quarter. However, this imbalance is driven by excess capacity in China, which makes up less than 0.1% of US module imports due to a combination of tariffs and enforcement of the (UFLPA). Still, the ripple effects caused by this imbalance have pushed US module prices down 10-15% over the same timeframe as supply constraints have alleviated”- SEIA-Solar Market Insight Report Q4 2023- Solar Energy Industries Association
The U.S. is actively working to bring solar panel manufacturing back home. The Inflation reduction act (IRA) was enacted in August 2022 which encouraged solar panel manufactures to come to the US while along with the domestic content bonus credit. The domestic content bonus credit in addition to the ITC (investment tax credit) to consumers who purchase solar equipment assembled in the U.S.
The ITC, domestic content, and other tax incentives are driving demand for domestic supply chain while also creating U.S. manufacturing jobs. With the 30% ITC remaining in effect until 2032, accompanied by additional bonus tax credits, the U.S. is experiencing a surge in commercial/industrial projects. The current economic landscape is a great time to explore solar, EVs, or battery storage as energy rates continue to increase, solar module prices decrease, and tax credits are favorable.
