Solar panel costs have tended to rise, even though they were supposed to fall owing to rising demand. The reason for this, though, is supply chain delays. Many of you who were expecting to purchase a solar panel in 2022 may be disappointed by this news. The investment tax credit, on the other hand, has not altered and remains at 26 percent. If you are thinking on investing in solar this year, you should be aware that it might be a risky investment. Solar prices increased for the first time in seven years in the middle of 2021. The major cause for this is a scarcity of semiconductors and other components needed for solar panel manufacturing.
According to Wood Mackenzie and the Solar Energy Industries Association, most solar suppliers had adequate materials and parts to finish installations last year before costs increased. Furthermore, when providers run out of components and cope with ongoing delays, a solar system in 2022 might wind up costing more than one in 2021.
The news is not all bad!
Residential solar projects were not struck as hard as commercial solar installations in recent years. Congress extended the federal tax credit rate of 26 percent through the end of 2022 in December of 2020. This stays unchanged, which is fantastic news for anyone planning to go solar this year. However, as previously stated, it will only be unchanged until the end of 2022. In 2023, it is possible that home solar installations may be phased out. Those that qualify for the ITC, however, may find it advantageous to install a solar system this year.
Higher demand for solar is being driven by rising worries about changing climates and the need to save more money, as well as ITC subsidies. This is not, however, a straightforward decision to make this year, especially given the supply chain concerns.
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Is the year 2022 the ideal to go solar?
Residential solar projects rose by 11 percent in the year 2020, despite delays caused by the outbreak. According to Wood Mackenzie, one out of every 600 US homeowners installed a solar system in the third quarter of 2021, reaching more than 1 Gigawatt and 130,000 solar panels.
Many factors have increased demand for investing in solar, including the Federal solar Investment Tax Credit and lower prices for residential solar panels. Although solar costs have decreased significantly since 2010, the most recent decreases were noteworthy.
What is the state of the solar supply chain?
Steel, semiconductor chips, and copper, all-important solar panel components, are now in limited supply. While solar costs have been stable throughout the first quarter of 2021, compounded cost increases across all materials began at the end of the first quarter and are already affecting installers.
The first signs of cost reduction appeared in the third quarter of 2021. However, current solar panel shortages may influence future home system installs.
The Solar Investment Tax Credit (SITC)
By 2022, the ITC offers a 26 percent credit to eligible persons. In 2023, the ITC rate declines to 22% before being phased out entirely for residential solar systems in 2024.
The outlook of this year!
Residential solar panels will be popular in 2022. The 26 percent ITC is guaranteed for this year, albeit depending on the outcome of the Build Back Better Act, it may be extended beyond its present phased schedule.