The cost of U.S. solar power is dropping faster than expected as the coronavirus stifles demand, according to a report from Wood Mackenzie. Residential-system prices will fall 17% over the next five years, the research company said Wednesday. That’s steeper than the 14% it had expected before the coronavirus. Wood Mackenzie also sees prices for commercial systems sliding 16%, and utility-scale installations will decline 20%, compared with the prior forecast of 13% and 16%, respectively, over that period.
The steeper decline comes as the global economy is forecast to shrink 4.9% this year because of the pandemic that’s locked down countries around the world. The economic disruption has dragged down electricity consumption, creating uncertainty about future power needs and making some homeowners reluctant to install rooftop panels. “With the demand destruction caused by Covid-19, the risk of oversupply is increased and module suppliers have reduced prices as a result,” Laura Hindley, a spokeswoman, said by email. “We anticipate module prices to fall throughout 2020.”
Falling system costs are boosting the competitiveness of solar against electricity rivals including natural gas and coal, and increases the appeal of rooftop units for homeowners. Already, solar power is among the world’s cheapest electrical sources.