Supply chain woes may cloud future of some TVA solar additions

With growing business and political support for a greener economy, the solar industry had hoped to now be finding its time and place in the sun.

While demand for solar installations is growing, the supply of solar panels to capture the power of the sun has been a challenge in the United States, particularly since a federal investigation began into potential trade violations involving solar panels bought from Asian suppliers. Even buying enough land for some of the planned utility-size solar farms has proven difficult for the Tennessee Valley Authority.

The Solar Energy Industries Association, a Washington, D.C.-based trade group, said more than 315 solar projects have been delayed or canceled and solar installation for 2022 and 2023 could be nearly cut in half due to supply chain problems and concerns about the inquiry launched by the U.S. Department of Commerce.

The delays are pushing back major solar installations planned by TVA and Georgia Power Co., among others.

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"We laid out an aggressive goal to have 10,000 megawatts of solar that demonstrates we're not just talking about this, we're serious about this commitment," TVA President Jeff Lyash told the TVA board this week during a meeting in Young Harris, Georgia. "But we have had some setbacks as have others. Some of our projects have been delayed by up to a year in getting them in service because of the problems in the availability of solar panels."

Amid the shortage of supplies, Lyash said costs have also jumped for some supplies by up to 50%.

"We have to face this reality," Lyash said, noting that some projects won't come online as fast as originally envisioned. "But we're working our way through it and it doesn't diminish our long-term commitment to solar."

Lyash said TVA has already built or contracted for 2,800 megawatts of solar generation, but even buying the land for the utility-scale solar farms has sometimes been hard. The typical utility-scale solar farm TVA is helping develop requires about 1 acre of land for every megawatt the solar array produces.

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"There is some difficulty in land acquisition as farmers and others express concern about whether this is the highest and best use of this land," Lyash said.

The delays are impacting both TVA's contracted solar generation and solar projects planned by local power companies, which have been granted more flexibility under new TVA wholesale contracts to develop some of their own power generation. In its financial report released Thursday, TVA said "mounting solar supply chain constraints, commodity price increases and the recent trade policy investigation into solar panel imports have created challenges for the U.S. solar industry, threatening project delays, cancellations and price increases."

The Southern Co., the parent company of Georgia Power, said in its first-quarter earnings report that nearly a gigawatt of its planned solar energy projects would be delayed by a year.

Southern Chief Financial Officer Daniel Tucker said Georgia Power had received regulatory approval to push back the installation of the solar projects. The delay to November 2024 applies to five planned solar facilities in Georgia that add up to 970 megawatts of capacity, according to the company's filing with the U.S. Securities and Exchange Commission. That's enough capacity to power 184,000 homes.

The projects are being developed by Nextera, EDF Renewables and Consolidated Edison under 30-year contracts to buy the power from those facilities. Southern has committed to reducing its carbon emissions to "net zero" by 2050, in part by procuring large amounts of solar energy.

NextEra also said it expected about 2.1 to 2.8 gigawatts of its solar and energy storage projects to shift from 2022 to 2023. The company cited the U.S. Commerce Department's trade probe into alleged tariff dodging by Chinese panel makers that could result in tariffs on solar panels imported into the United States.

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The U.S. Department of Commerce decided earlier this year to investigate whether Chinese manufacturers are skirting U.S. duty rules on solar imports from China by shipping components through affiliates in four nearby countries - Malaysia, Thailand, Cambodia and Vietnam - where panels are assembled for export to the U.S. Those four countries account for more than 80% of solar panel imports, according to the American Clean Power Association.

"This decision has created market uncertainty that threatens the deployment of solar projects across the Tennessee Valley," Gil Hough, executive director of the Tennessee Solar Energy Industries Association, said in a statement Friday. "This happened while the entire energy market was already suffering supply, fuel and logistical challenges from COVID and the war in Ukraine. This is causing delays in both building projects already under contract and delays in signing new contracts for projects."

But solar supporters stress that the supply chain interruptions are slowing future solar installations but not hampering existing solar generation.

"The renewable energy industry has been hit by supply chain interruptions just like everybody else," Stephen Smith, executive director of the Southern Alliance for Clean Energy, said in a telephone interview. "It's an issue of slowing down the future build-out because of supply chain problems but it is not disrupting existing capacity. There are no moving parts with solar and the existing capacity is performing well."

Smith said the delays and cost overruns for new solar installations will likely still be far less than what Georgia Power and other owners of Plant Vogtle are facing trying to finish the construction of two new nuclear reactors, which are now years behind the original schedule and now projected to cost more than $30 billion.

- Compiled by Dave Flessner