Renewable Energy SmartPod
Renewable Energy SmartPod
The State of the US Solar Industry
Policy shifts and market pressures are making big headlines in renewables industry in the US. Amid all the uncertainty, Daniel Cruise, Partner and Head of Renewables at LIUM, returns to the show to provide an update on the state of the solar sector. Leveraging data gathered via LIUM's solarSAT montioring system, Daniel offers a near-term forecast for utility-scale solar that many listeners of this podcast might find surprising.
More resources from KPMG:
Shaping the Future of Renewable and Emerging Energies
Natural Gas Power Surge
The First 100 Days: The New Administration's Impact on Energy
(Note: This transcript was created using AI. It has not been edited verbatim.)
Sean McMahon 0:00
This episode of the Renewable Energy SmartPod is brought to you by KPMG. The emerging global energy landscape is driven by the need to enhance energy efficiency, resiliency and security. The team at KPMG believes strongly in an approach wherein energy industry incumbents and newcomers are scaling proven solutions and introducing innovative technologies. To learn more, visit kpmg.com/us. That website, again, is kpmg.com/us or just click on the link in today's show notes.
Sean McMahon 0:48
What's up everyone and welcome to the Renewable Energy SmartPod. I'm your host Sean McMahon, and today we're going to be taking a close look at the solar market in the United States. Uncertainty on the policy front and other market pressures are making big headlines in the solar sector. So I'm going to be joined in a minute by Daniel Cruise, a partner and head of renewables at LIUM. I invited Daniel back to make another appearance on this show so he can highlight the difference between what everyone is talking about in solar and what's really going on on the ground. And for what it's worth, if you're someone who's fretting about the future of solar, I think Daniel's analysis of the near term prospects might surprise you.
But before we hear from Daniel, just a quick reminder to check out our most recent episode that was all about the fate of the Inflation Reduction Act. Of course, that episode is about six weeks old, but with the big, beautiful bill still working its way through Capitol Hill, I think you'll appreciate the expert insights from that episode, which features Alfred Johnson from Crux and Lauren Collins from Vinson & Elkins.
And as always, if you want a daily dose of renewable energy news delivered directly to your inbox, head on over to SmartBrief.com and sign up for the Renewable Energy SmartBrief or just click on the link in today's show notes.
Right now, let's get things rolling with Daniel Cruise from LIUM. Daniel, how are you doing today?
Daniel Cruise 2:23
Good Sean, how about yourself?
Sean McMahon 2:26
I'm doing wonderful. It's great to have you back on the show. I think you've been on multiple times, and we love having you back on because it's great to hear all the research that you and the team at LIUM are compiling about what's going on in the industry. And it's safe to say that since the last time we spoke about a year ago, maybe things have changed a bit. What are you seeing out there?
Daniel Cruise 2:47
I would say, if I think back a year ago, time has changed, and certainly from the policy standpoint, just the outlook for the policy and that's huge, I would say, though, from a standpoint of, like, fundamentally, where is the activity right now? Where is it headed over the next year, year and a half? And if I remember back a year ago, it was still utility scale solar pretty strong, and it was residential solar really looking weak. I think if we fast forward now, residential solar has been completely obliterated. Policy. Part of it, the demand, just overall kind of lack of enthusiasm from homeowners, has been the other part, while utility scale solar hadn't been stronger like this, is this is the absolute strongest five months, by a long shot last five months that we've had in utility scale solar ever so, yeah, it's strange, and really kind of navigating the anecdotes and the policy has been a real interesting challenge over the last few months.
Sean McMahon 3:56
All right, so when you look at the map, you know, speaking specifically the US. So are there pockets that are really driving this growth in utility scale solar? Is it across the board? You know, what do you see?
Daniel Cruise 4:08
Yeah, I think so. For sticking on utility scale solar, I would first say, yeah, it's across the board. People need a lot of power just because we're not adding it on the rooftop side, we are adding it in big ways on the utility scale side. So Texas is the one that stands out. It would have stood out a year ago. It still stands out. Texas is by far the biggest market for utility scale solar, and it's growing, and it still continues to grow. California doing fine, not great, but fine. The surprising areas is probably into the Midwest. The Midwest is doing fantastic. Parts of Illinois, Indiana, Ohio, Minnesota, like these states are really coming on.
Sean McMahon 4:52
Wait a second, pretty. Wait a second. I gotta jump in there. Minnesota, not quite the. Bastion of sunlight that we all think of, I mean, aside from Illinois. So how do you explain that? What's going on in the Midwest that's driving all that growth?
Daniel Cruise 5:07
Yeah, Minnesota is more known for frozen lakes, rather than a lot of sunlight. But it's really just broader, I think demand for electricity. And turns out, we've known for a while, solar is the quickest way to get there. Sure, would some utilities prefer to bring on natural gas in a bigger way? Yeah, but you can't really get it on. You're not getting nuclear, and so like, you have to turn to utility scale solar. And so there's a lot of projects being developed now have gone through the approval process, finally, after being here for last five years, and in Minnesota, solar production is growing.
Sean McMahon 5:45
So I want to dig into that a little bit, because you mentioned earlier, kind of that, you know, there's policy story going on, and then what's really going on in the marketplace, and you've just revealed something that I don't think people you know know about. And in that context, you mentioned how it's the fastest, right? And that is a storyline we've heard about, right? There's a lot of executives, a lot of policymakers who support the IRA are saying, Hey, if you want to have this era of American energy dominance, renewables get you there faster. And, you know, that's what I heard you say about the Midwest. So a lot of folks say it's, you know, 18 months or so. But what are you seeing in reality? So these projects across the Midwest, or even, you know, in places like Texas and California, how quickly you know, once the approvals are in place, what's the timeline look like?
Daniel Cruise 6:24
Well, I think let's back up first to when the applications happened, and so I'll use the Midwest as an example. Most projects that start now were first applied for from 2020 21 and 2022 so they've been a long time coming. This is even before the IRA was was even thought of. These projects were already in the works. They were already economic. From that stance, there's a huge backlog of projects that they're just a need for power. Go to the IRA. Then, as the IRA happened in 2022 then there was more fervor, more applications, but you still have this huge backlog of projects, even before Ira happened, that are just now starting to get approved through the interconnection agreement and everything else. And so I've been waiting three, four years. Finally got an interconnection approval. Now I'm ordering my equipment. I'm going to start construction. Yeah, there's going to be changes on the fringe in terms of policy, you know, and there's some real big changes coming down, but for the most part, these projects were economic before, and they're they're going to be economic after, and so that's where we are now.
Sean McMahon 7:33
So then, at the end of that timeline, from the day that that project starts turning dirt, how long until they're connected.
Daniel Cruise 7:40
So let's say two or three years until you get the interconnection approval. Then from there, you go through another year, year and a half, on average, to just start construction. And then from the start of construction, then you got another year and a year a half to actually get it energized and into the system and producing power. So altogether, solar still five year, six year cycle. But the point is, half of that cycle has already happened, and so you're in the later half of that cycle. And so what's happening on the policy side is only the second half of that and to us, it means more for 28, 29, 30 than it does for actual electricity generation this year next year and the year after.
Sean McMahon 8:23
We'll be right back.
Just a quick reminder that this episode of the Renewable Energy SmartPod is brought to you by KPMG. Amid booming demand for energy, KPMG is at the forefront of helping organizations navigate new energy development and energy efficiency. With an industry based structure, KPMG brings together versatile multidisciplinary teams comprised of individuals who have the precise skill sets needed to serve this sector as it grows. To learn more, visit kpmg.com/us. That website again is kpmg.com/us or just click on the link in today's show notes.
Sean McMahon 9:21
And now back to my conversation with Daniel Cruz from LIUM.
Okay, now we've mentioned policy a few times, and obviously there's some concerns about the ultimate fate of the IRA and that's dominating the headlines right now. But what's your takeaway from what's already happened amid all this uncertainty? I mean, there's been a few bankruptcies in the solar sector. Just a higher level view, regardless of where the minutiae plays out, what kind of impact has this had in real time?
Daniel Cruise 9:48
Yes, good question. We were talking to a lot of EPCs and OEMs and investors out there. There's obviously a lot of anxiety around it. I would say, though. That for utility scale solar developers, EPCs, the OEMs, are managing it and already anticipating the changes that are coming down the pipe. And I would say, from at least from our perspective, if you add up all the anecdotes and what we've seen so far, you still probably have growth in utility scale solar, regardless of what comes down in the latest Senate Bill, assuming we stick to kind of 28.9 on the ITC companies are already safe harboring they're already getting ahead of it. They're getting panels in, they're getting trackers in. They're lining up jobs in anticipation of that. And so from our standpoint, what happens over the next 18 months? Like, feels weird saying this, but a lot of it's noise, and I think a lot of activity continues to happen on utility scale, solar.
Sean McMahon 10:51
Are you hearing about any projects, perhaps in jeopardy, or just all this stuff already turn in, and it's those projects that are in jeopardy are too far out there. You know, past that 18 month window you're talking about?
Daniel Cruise 10:59
Yeah, right, right. I mean, the projects that are going to be in jeopardy were on the fringe already, so they were going to be kind of your ones that really needed all of the breaks and stuff. But yeah, no, not really. Like, as far as what we track the next 18 months, the fundamentals, or developers and EPCs are continuing to kind of progress with their plans, and they will continue to progress with their plans over the next 18 months or so, regardless of what's happening with the bill.
Sean McMahon 11:27
And on the supply chain side, everything's fine. I know a lot of a lot of developers, you know, kind of stockpile panels and kind of anticipated all this. So, you know, everything's they've already got everything they need on hand,
Daniel Cruise 11:37
Not everything, but they're getting there. The domestic aspect, the increase in domestic supply is huge, even before, you know, we in the solar industry were talking about tariffs, long before everybody else started talking about tariffs. So this is nothing new. From that standpoint, that supply chains have moved over the last 18 months, they've moved away from Southeast Asia already. You now have much more modules coming from India. You have much more domestic content and domestic supply. So, yes, the supply chains aren't there yet, but they've come a long ways and pretty close to where they need to be to execute plans over the next 18 months.
Sean McMahon 12:18
You know, we've got a good job of talking about the next 18 months. But now I want to ask you to, kind of, I want to look in the crystal ball and kind of ask you to look a little farther out there. So do you have any predictions about how this all shakes out in the longer term?
Daniel Cruise 12:33
Yeah, ultimately you need more electricity. We've now taken that past anecdote and these demand forecasts to now see demand is increasing. We can see that happening in the monthly figures and electricity figures and things like that. We know the demand is increasing. So longer term, we need more electricity. Where you get that in 2829 2030 is going to be from solar, and most likely from utility scale solar, and so you don't have the ability to bring it on from gas. You certainly don't have the ability to bring it on from from nuclear. And so we will continue to grow the utility scale solar market in 2728 and 2920 30. That's about as far as I can go. I'm gonna stay away from 2030.
Sean McMahon 13:20
I got you all right. Well, it's interesting to hear your thoughts on all the negotiations going on and on the policy front. But are there any other research notes that you've put out recently that you want to share with our listeners?
Daniel Cruise 13:31
Yeah, so the things that we've been talking about lately has been partly with the product called solarSAT where we track all of the US utility scale solar projects with satellite imagery. And so each month, we get a pulse on how good or bad the market has been over those last 30 days. If you aggregate all of those like I mentioned already, the first five months of solarSAT reports have been very good. Companies are starting projects in a big way. The other thing that we wrote about lately is the production from solar in 25 and 26 I think we now know. We've seen enough to know what 24 was, and 24 was a big year for utility scale. Solar production is up by a lot. I think what's different is there seems to be this attitude that 2025 electricity in solar generation and growth and everything there will be flattered down from what we've seen on construction side, no way there will be much more electricity generated and put online in 2025 than you did in 2024 and not only that, in 2026 there will be much more electricity generated from utility scale solar in 2026, and 2025 and you can see that it's already happened. We see on satellite imagery. We know the development. We know it's already started. So that would be the other thing we've talked about. And then the third thing I've mentioned that we've got a new product that we've just launched is called a solar. Crew tracker. So to this point, we feel like the industry doesn't really have a way of tracking utility scale solar other than looking at the EIA Data or some of this other stuff, which is, in our view, very misleading and inaccurate in a lot of ways. And so what we've now started to do on a monthly basis, which anybody can access this through our website is you can look at, as of the latest month, how many active crews were out there working in the United States. Right now, there's about 185 or so that are active employed crews are on those locations. This is actually down from where it was a year ago, which, if you go to our website, you can kind of see some of these specifics. This is actually down from a year ago, which is kind of like, well, Daniel, what do you mean it's down? Crew counts are down. But yeah, we're talking about the market's never been better. It continues to grow and things like this. And one of those nuances, which we point out in some of our notes is this market ebb and flows. And so the ebb now is cruise. There's much more crews on solar panel installation. And I don't want to get into too much of the details, but panel installation takes a lot more crews, and it's going to soak up a lot more of those crews. Well, when we were in 2024 we had a ton of crews out there doing the panel installation, whereas now that more in the new construction phase and putting racking systems on now. And so that's where we can see that ebb and flow. Even though panel crews are down, you'll see new construction and racking crews are up anyway, the long, long winded way of saying, These crews will start to go up. And you can go on our website, you can kind of see this and track it. So that's something new, exciting that we've been talking about lately and have launched recently.
Sean McMahon 16:43
So are you pulling that data from the same solarSAT from the images? Or how are you pulling that data?
Daniel Cruise 16:47
That is part of what we're doing to at the core, we can actually see with the satellite image. We can see trucks moving around and everything like that. To know, I mean, not just as an active site like Has it started construction now we can say, okay, something happened. It got delayed. It doesn't have activity out there. Then we'll count it off, even though it's technically under construction. It's not a crew anymore. It's not as I don't think it's valuable to kind of track, and so that's essentially how we're doing it.
Sean McMahon 17:13
How many days of, I guess, inactivity would make you kind of cross it off a list of of active crews?
Daniel Cruise 17:18
There's different metrics, depending on where it is. And at the end of the day, if we're looking at satellite image, a rough rule of thumb would be 30 days of inactivity. And then there's, there's not people coming back for a while.
Sean McMahon 17:31
I got you Well, hey, listen, Daniel, I love hearing about new ways that you're using solarSAT. I think that technology is awesome. It kind of eliminates all the anecdotal stuff out of the out of the data, you can kind of see pictures of what's happening. So it's great to hear about that, and it's always great to talk to you. So I appreciate you coming by to join the show.
Daniel Cruise 17:55
Cool. Thanks, Sean.
Sean McMahon 17:58
Well, that's our show for today, but before we get out of here, I want to say one final thank you to the exclusive sponsor of today's episode, KPMG.
If you want more renewable energy news delivered directly to your inbox, head on over to SmartBrief.com and sign up for the Renewable Energy SmartBrief. The Renewable Energy SmartPod is a production of SmartBrief, a Future company.