Sustainability Infrastructure

Solar energy industry disrupted by coronavirus pandemic

solar panels industry struggle coronavirus panedemic COVID-19 April ross E&E News supply chain interruptions manufacturing tax credit

The global coronavirus pandemic is undoubtedly taking a toll on various industries. Now, solar energy is the latest sector to take a hit from the outbreak. 

E&E News reports that solar energy companies have reported supply chain disruptions from countries that manufacture the equipment vital to solar panel construction. Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA) told reporters that the pandemic and the subsequent production setbacks “have been impacting the ability to finish projects on time.”

Since they import most of the materials used to construct solar arrays, or panels, solar energy companies in the U.S. have been hit particularly hard. Energysage reports that the top solar panel manufacturers in 2019 were headquartered in China, such as JinkoSolar, JA Solar and LONGi Green Energy Technology. E&E writes that other Asian hubs for solar panel material production include Malaysia, Vietnam, Singapore, Thailand and South Korea, all of whom have been impacted by the COVID-19 pandemic. 

Ross Hopper published an open letter on the SEIA official blog, discussing the impact the coronavirus is having on the sector. 

“It is evident that the COVID-19 pandemic is taking a toll on our industry. We are getting reports from our members about supply chain disruptions, project delays, sales challenges and more. It is clear that companies will feel the effects of these market disruptions,” she explained.

Another issue arises in the form of tax incentives for environmentally friendly projects like solar. 

Per federal investment tax credit terms, if a company began a solar installation project by the end of 2019, they are eligible for a 30-percent tax credit if foreign materials are delivered within 105 days, according to E&E. A “safe harbor” provision currently in place to protect the government from certain liabilities related to deliveries, meaning that if supplies arrive after the 105-day deadline, the tax credit drops to 20 percent and continues shrinking while the project is delayed. 

As the network of suppliers for solar material grows strained, dwindling tax benefits are increasingly likely. 

Ross Hopper addresses this problem in her letter, saying that “it is possible that companies could be unable to meet project delivery deadlines, which could change the tax treatment or eligibility for state incentives for those projects. We are looking into this and other implications at the federal and state level and advocating for policies as appropriate to accommodate the unexpected delays and detrimental impacts our industry is facing.”

Additionally, with social isolation and quarantine measures in place, the labor force aiding construction will likely face disruptions as well. 

We just don’t know how long this new normal in the U.S. of having people work from home and not allowing people to congregate will last,” said Ken Pedotto, CEO of U.S. company Solar Simplified. 

Optimistically, solar had a record-setting year in 2019, with studies stating that solar installations accounted for 40 percent of all new electricity generating capacity in the U.S. 

“Our industry is resilient and has weathered crises before,” Ross Hopper said. “As governments and other world leaders work to respond to this evolving crisis, we are going to do our part to ensure public safety and support the U.S. economy.”