Updated: Jan 10
Because OpenSolar is growing so fast, we’re able to see changes in the solar industry sooner than most. We work closely with thousands of contractors, and in the USA we’ve seen a slowdown, after a very strong first half and summer. It’s not surprising. To combat inflation, we’ve just seen the fastest, steepest increase in interest rates in a generation, temporarily gumming up the works in the lending market and adding to the cost of monthly payments for solar. We also haven’t seen the full effect of rising energy prices in the US yet (Note: we see a very different picture in other parts of the world), so interest rates have had a bigger relative effect.
This is the nature of the solarcoaster, as all of our brothers and sisters in the industry can attest.
But this is a bump in the road - and the outlook for 2023 looks sunnier.
The Fed is signaling a shift to lower interest rate increases, so we anticipate that the chaos in the lending market will settle down substantially. Add to that the increase in the price of electricity in the US that will start to hit home over the coming months, and with that - and supportive policy - you have the perfect recipe for an imminent and positive uptick in solar sales and installation activity again in 2023.
Underpinning all of it of course are the tailwinds from the Inflation Reduction Act. The Solar Investment Tax Credit has been increased from 26% to 30%. The 30% applies to both business and residential projects, including projects installed in 2022, and will last until the end of 2032.
Energy storage projects were previously ineligible for tax credits unless they were connected directly to solar power projects. The Inflation Reduction Act removes these requirements, and allows energy storage projects to receive the same 30% tax credit, even if they are stand-alone facilities. Batteries connected to a solar power project will continue to qualify for the credit.
And even supply chain woes are showing signs of easing, with significantly more optionality for US installers in the medium term, at least $25.7 billion in new US clean-energy factories in the works, and 500GW of global solar supply en route by the end of 2023.
The crew at OpenSolar has seen these cycles countless times before. With more than 222 years of combined experience in the solar industry, we’re quietly plugging away without getting too stressed about it. And because we charge Solar Installers $0 for our end-to-end software, our biggest focus is on helping them transfer to our platform. As the industry goes through its ups and downs, they’re realizing that they can insulate themselves by removing $1000’s to $100,000s from their annual costs, but still enjoy the very best class-leading software.