April 26, 2021

Residential Solar Installations - U.S. Demand Strong, Storage Limited by Capacity

By Alex Georgalas
U.S. solar installations increased yy during 1Q21, aided by the extension of the solar tax credit as well as growing awareness and improving technology, while sales of energy storage systems have been limited by low inventory.
  • Residential solar installations up yy during 1Q21 and expected up 2021 yy for 5 of 6 sources
  • 2021 solar inverter orders expected to increase yy for 4 of 5 sources; inventory mostly adequate for now, but lead times not improving
  • ENPH cited as gaining share by 3 sources, aided by efficiency, longer lifecycle of its microinverters vs. string inverters
  • 3 of 4 sources expect 2021 energy storage system sales to increase yy, though still make up small percentage of overall installations

Growing Demand for Residential Solar
Solar installers reported improving demand during 1Q21 following the two-year extension of the federal investment tax credit for solar, effective Jan. 1. Sources said more customers have moved to take advantage of the savings and that increasing costs of traditional energy and the bump in property value that accompanies solar implementation have also boosted demand. Solar installations increased yy for five of six sources, who also expect 2021 demand to increase yy.


  • “The driving factors are the astronomical prices PG&E [Corp.] charges for electricity, the increase in property value and the 26% tax credit for this year that will be reduced next year, so it is a sprint to save on this year’s taxes.”
  • “The reasons for our success were multifaceted, but the primary thing customers mentioned is incentives, in the form of federal tax cuts as well as local utility credits.”
  • “Subsidies are still substantial and probably the single biggest factor affecting demand.”
  • “The federal government program extension is nice, but it would be better had they gone back to the 30%. Our state government is the issue; they’re blocking new installs because they have closed down incentives. People are waiting for those to open up again.”
  • “Electricity prices are up and people want to do something to add value to their homes.”
  • “The No. 1 reason people pass on an install is sticker shock.”
  • “A really big challenge that ultimately stopped people from going with solar was job uncertainty. You’re not going to spend thousands of bucks on solar panels if you aren’t sure you’ll have a paycheck in a month.
  • “Installation costs have increased from last year, but that has only had a slightly negative effect on demand.”

Orders Improve for Solar Inverters
Four of five sources expect 2021 solar inverter orders to increase yy; however, although inventory is adequate for now, lead times remain long and have not improved, and sources expressed concern about future shortages


  • “Lead times are still leaving something to be desired. COVID-19 impacted manufacturing, and everybody is still in a game of catch-up.”
  • “Lead times for installation vary greatly by state, county and municipality, because permits are the biggest obstacle in starting an installation. In some cities, it takes eight weeks just to get a permit.”
  • “Some of the equipment I can’t get for current orders. Enphase [Energy Inc.] is doing pretty good with inventory, although we were told there could be an issue coming, so we are ordering more to have enough for the year. They estimate a month backorder about to happen.”
  • “We will need much more come summer’s solar season; for now, our current inventory is adequate.”
  • “We are able to get what we need, but some items are selling out faster than others.”

Enphase Gains Share with Microinverters
Three sources said Enphase gained share during 1Q21 because of superior offerings -- efficiency and longevity of microinverters relative to string inverters -- and better value.


  • “Microinverters are gaining market share; they are easier to design and install.”
  • “The string inverters are less expensive but losing market share. String inverters last approximately 10 years, whereas microinverters have a 25-year warranty.”
  • “Enphase is a more solid company -- simple as that. They have been on the cutting edge with technology for so long that they have a really loyal following among installers.”
  • “People are calling asking specifically for Enphase; clearly they are grabbing some of SolarEdge [Technologies Inc.’s] business.”
  • “It really comes down to string inverters versus microinverters.”
  • “Even though we have seen increased interest in Enphase compared to SolarEdge, SolarEdge has not lost any market share.”
  • “Enphase has gained some market share in the past few months. There are more solar companies offering their product and they have a real sales pitch.”
  • “All solar inverter manufacturers are on a level playing field.”
  • “Microinverters sell themselves once you explain their benefits. Not only do they bank more energy than string inverters, but they are way less of a headache for homeowners. The cost is higher, but that’s the only downside.”

Sales of Energy Storage Limited by Supply
Although only a small percentage of overall installations include power storage, three of four sources expect 2021 sales of energy storage systems to increase yy. Inventory levels are the main limiting factor, as sources had trouble obtaining enough product to meet demand.


  • “Only 10% of installations include power storage. … Of course, you have your diehard off-grid individuals who want to bank energy, but for most customers, the power storage feature is too pricey to be worth it.”
  • “Our Tesla [Inc.] backup power systems are more popular than other options. Demand for the Powerwall is huge, especially in Texas, because of the recent power outages. It takes us six to eight weeks to get a Tesla Powerwall.”
  • “Fifty percent of our customers inquire about power storage, but we have a very difficult time getting batteries if we can get them at all.”
  • “Although they make up a small percentage of overall installations, energy storage systems are still on the rise. People are more interested in off-grid living these days, and power storage is certainly part of that picture.”
  • “The sale of batteries has remained the same for the past three months [yy], not because the demand was not there, but equipment availability is limited -- if available at all.”
  • “If you look at how high solar installation prices were even a few years ago, it’s easy to see why people are catching onto it -- now that it’s gotten cheaper. The same thing will happen with energy storage systems, which are still pretty pricey right now but will have to level off at some point.”
  • “If we can get batteries, the sales will increase for this year over last.”