What went wrong for the solar industry in 2023? Did anything go right? What can we expect in 2024 in terms of residential solar demand and solar panel supply? What should solar installers be cautious about? What opportunities should they seize? We discuss with David Dunlap, VP of Product Strategy at BayWa r.e. in this episode of Power Forward!
Watch the full 14-min chat above. Below is part of the transcript covering our rewind of 2023.
Crowell: So, when I say “2023,” what are the first things that come to your mind when it comes to solar? Let’s do one negative and one positive.
Dunlap: “If I were to choose a singular negative first, it would be the broad topic of policy changes that are directly impacting the economics of solar. That includes the interest rates, changes in financing — financing viability or financing terms — and the change in California from NEM 2 to NEM 3. All of these basically are causing what we assumed were the standard ways of an economic sale for solar to make sense to be more challenging.
It’s also had the impact of businesses needing to manage their cash differently, manage the economics of their business very differently, and sometimes those switches are just too large. I think the last piece of it that’s there, is when all those kinds of challenges are in front of the consumer, and the economic argument is not as strong, then there’s a drop in consumer confidence.
On the positive side, I actually think that the price compression that we’ve seen this year in the long run will be of benefit. Generally speaking, price compression improves the economics. It increases the competitive differentiation, and it should remove some of the redundancy and less differentiated offerings out there, which tend to add more complexity and chaos. So, I think there’s still the opportunity for innovation and competitiveness, and when the price spectrum is a little bit too broad, sometimes you miss what that differentiation is.
Crowell: The last time we chatted, we discussed the module market in depth, and I wanted to dig into that again. How do you think the module market matched forecasts at this time last year? Where did we get it right? Did we miss something?
Dunlap: If we rewind a little bit further, back to summer of 2022, that was when pretty much every company that had manufacturing capability was ramping up and believing that they could capitalize on the high residential module price market in the U.S. The volumes were kind of crazy. That was also the beginning of the two-year presidential moratorium on any new tariffs. So, the risk of the tariff combined with the historical low detention rate of the UFLPA created a window of opportunity for those importers to say now’s our chance to get in on the American market.
At this time last year, we probably were underforecasting what the oversupply would be because we were at the very beginning of seeing that oversupply, and we didn’t really understand how soft the market would get. I think, in turn, that decline of the residential demand was underforecasted. Nobody really wanted to believe that it was going to decline as much as it has in the second half of the year. As a result, by the end of the second quarter this year was really when we understood the full magnitude of contraction.
Crowell: What are we thinking right now? And I wanted you to also touch on any new developments with the UFLPA detentions because we were reported that some more modules with China poly have been released by Customs, which maybe signals that more is to come.
Dunlap: I do believe that we’re um some manufacturers are starting to see a potential end to the the excess, and I think this is where the UFLPA comes in …
Pick up the conversation right there:
We discuss ….
- 4:05 – Update on UFLPA detentions / 2024 supply outlook
- 6:37 – Residential solar demand forecasts
- 9:19 – Questions solar installers should ask themselves right now
- 11:07 – New opportunities to keep an eye on? Electrification.
- 12:45 – How worried should California installers be right now?
— Solar Builder magazine
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