The SolarKal Quarterly 3Q22: Why NOW is a great time to go solar…

Quarterly Report




David Wei


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There have been a lot of headlines about solar recently – higher electricity prices, tariffs, supply chain, and concerns about the macro-economy – that have muddied the water around solar’s bottom line.  At SolarKal, the country’s leading solar marketplace for C&I businesses, we are leveraging our massive market dataset to clear the water, and here’s what you need to know:

Solar investment returns are rising and payback periods are shortening, as the benefits from higher electricity prices significantly outweigh higher costs.

Electricity bills are already up double digits, with the EIA projecting 50-100% higher electricity rates this summer:

The Energy Information Administration (EIA)’s most recent data release showed markets across the country experiencing exponential electricity price increases as early as April. The agency’s June 2022 Short-Term Energy Outlook suggests that prices have shockingly more room to run – wholesale electricity prices this summer are expected to be an astronomical 50-100% higher across most markets:

Latest EIA Report Shows DD% Increases Already

(EIA, April Report) % YoY

California 11%

Florida 17%

Illinois 15%

Massachusetts   7%

New Jersey   6%

New York 14%

Avg % YoY >12%

Nationwide % YoY 10%

High-population markets like New England, New York, and the mid-Atlantic are all forecast to average wholesale prices well north of $100 per megawatt-hour (MWh) (i.e. 10 cents per kWh) with California and the Southwest not far behind – last year.

Unsurprisingly, this increase has been driven by the global increase in the price of fossil fuels – specifically, natural gas, which accounted for 40% of last summer’s generation and has seen prices nearly double since January.  Future gas prices are unclear now that the EU has announced a more comprehensive ban on Russian gas imports, leading the EIA to predict that prices will remain at these high levels through 2023.

These higher prices directly impact bottom lines and wallets, but for those considering solar, there’s a huge silver lining: higher prices means more profit for solar systems, where the cost of generating a MWh from the sun is $0.  Assuming electricity prices remain elevated for the next two years before reverting to 2021-path levels, financial returns on solar projects are up ~1-3% across the country, and payback periods have been shortened by 1-2 years – a project in states like New Jersey or Illinois could pay back in just three or four years if prices remain high.

Solar by the Numbers – Estimates from SolarKal’s Marketplace

* EIA forecast, SolarKal

** IRR, payback assumes Variable Cost remains elevated for first two years before reverting back to 2021 levels

Costs are up about 15% – why?

On the flip side, the cost to install commercial solar panels is up as well. This is softening some of the benefit of high electricity prices, but only somewhat.

What’s driving these cost increases?

In short: Inflation, supply chain, and tariff-related headlines.

Inflation and Supply Chain are the clubhouse leaders’ “phrase of the year,” and yet, they are no less necessary or relevant a call-out in the solar world.  Inflation has affected business globally, with everything from labor prices to raw inputs up ~5%-25% over the last year.  Our vendors across our dozens of active projects have also consistently called out supply chain difficulties – specifically long delay times in acquiring electrical equipment like transformers – as headwinds.

A recent Illinois RFP we ran demonstrated how prices are up across the board, as most of the large cost centers are experiencing 10-15% increases versus just six months ago:

Specifically on solar panels, despite a bit of temporary paralysis surrounding a pending tariff investigation by the Commerce Department, our vendors have worked through issues procuring panels.

The investigation, which was announced in March, threatened significant tariffs on panels coming from Vietnam, Malaysia, Thailand, and Cambodia – four markets that collectively provide ~80% of modules in the US – and would add on top of other tariffs on Chinese-made modules. The investigation caused some significant short-term uncertainty, though we have since seen the tariffs relieved by the White House this month.

The two-year tariff exemption and enactment of the Defense Production Act encourages the expansion of US manufactured solar energy products including heat pumps, batteries, and the building of insulation and transformers, equipping US power grid systems with the infrastructure needed to shift the country towards clean and economical energy that is not dependent on outside nations.

Even as the threat of tariffs has temporarily receded, solar panel prices still remain high, as the raw commodities that go into panels continue to follow the broader upward trend we’re seeing in other commodity markets.

Overall, despite the increase in project costs, it’s clear that higher energy prices are a massive boost to the financial profile of going solar – and now is a singularly advantageous time to procure solar and lock in lower prices and higher returns ASAP.

For more detail on how these changes are impacting specific local markets such as New Jersey or Illinois, you can reach out to us at

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