Climate and energy analytics company Sunairio has recently conducted a study revealing the increasing influence of climate change on solar energy generation in the United States. This groundbreaking research challenges the effectiveness of traditional solar production risk assessment methods, which fail to consider the growing impact of climate trends. The study sheds light on how climate change-induced weather patterns, such as cloudier days and increased precipitation, are negatively affecting solar production, particularly in the Midwest, Southeast, and East Coast regions.

Many industry-standard approaches to solar production risk assessment rely on decades-old methodologies that utilize historical data but disregard the evolving influence of climate trends. Consequently, pre-construction energy models overestimate solar production from new projects by 5% to 12%. This discrepancy is particularly pronounced in regions experiencing the adverse effects of climate change, as deviations from historical norms become increasingly significant.

While previous studies have focused on identifying and diagnosing solar asset underperformance in the United States, the Sunairio study is the first to quantify the specific influence of climate change on the issue. By examining a representative sample of 100 utility-scale solar sites across the country, Sunairio conducted forward-looking, 15-year production estimates that accounted for present and projected climate-induced changes in local weather patterns. These estimates were then compared to two industry-standard methods – typical meteorological year (TMY) analysis and historical time series analysis – both of which ignore climate trends.

Sunairio’s analysis revealed that TMY methods, which have remained relatively unchanged since their introduction in 1978, create excessively optimistic solar generation forecasts by assuming sunnier-than-typical weather patterns. Across all the solar sites studied, an average production gap of 2% currently exists, with estimates projecting an increase to 5% by 2034. On an individual site basis, the disparity between conventional backward-looking analysis and climate-change-aware simulations can reach up to 5% currently and 12% by 2034. Such differences in estimated energy production translate to significantly reduced project returns for solar project owners, particularly when considering the impact on equity returns.

Sunairio’s study highlights the significance of incorporating climate modeling insights into pro-forma modeling for solar projects. By quantifying the influence of climate change on solar energy generation, project investors can refine their estimation methodologies to ensure future production and revenue targets are met, even amidst a changing climate. These insights provide a roadmap for accurate solar production estimation and underscore the importance of adapting to the evolving environmental conditions.

Climate change is increasingly impacting solar energy generation in the United States, significantly underestimating the challenges faced by solar project owners. Sunairio’s study exposes the limitations of traditional approaches to solar production risk assessment and emphasizes the need to incorporate climate modeling into future estimation methodologies. This research serves as a crucial step toward ensuring accurate solar production forecasts and enabling sustainable growth in the renewable energy sector.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The energy market is highly volatile, and readers should conduct thorough research before making any investment decisions.