The outlook for solar and storage in 2022 is pretty clear. Because of dramatically higher electric rates and changes to Net Metering in California, I expect the first half of the year to be the best time for homeowners to install solar and storage in over a decade. Second half of the year in California…not so hot. On the other hand, the second half of the year will be great for homeowners throughout the rest of the country since the federal Solar Investment Tax Credit (ITC) is stepping down to 22% at the end of 2022.
There are a lot of moving parts that will affect the industry in 2022. I’ve tried to break down these changing factors into three categories: economics, availability and safety. So here they are:
Economics
- PG&E rates are guaranteed to increase. Why? –It’s the utility business model. Full stop.
- The California Public Utilities Commission (CPUC) announced a preliminary decision to eliminate Net Metering. They call it a transition from NEM 2 to NEM 3. The reality is that you are better off with no Net Metering at all. This preliminary decision goes into effect at the end of May 2022 unless the CPUC changes their mind.
- The Solar Investment Tax Credit (ITC), currently at 26%, goes down to 22% in 2023, then zero in 2024. So all solar installations will effectively be 4% cheaper this year than in 2023, including any roofing or electrical work related to solar.
- Solar and battery system prices are going up, not down.
Equipment and Contractor Availability
- Battery production is completely sold out until at least the second half of 2022.
- There are plenty of solar panels, just that price is slightly higher than in previous years.
- Contractors that have battery supplies will be very, very busy — and are likely to be overbooked by the spring of 2022.
Safety
- Wildfire risks are increasing in the western U.S., and severe weather is increasing throughout the country
- More blackouts will occur as utility equipment fails to keep up with demand and the utility companies turn off power
- Homeowners and business will increasingly turn to clean, quiet, reliable batteries to minimize these risks
So if you are thinking about installing or upgrading a solar and battery storage system and you are still on the fence, please tune into this week’s Energy Show.