behind that of market leaders that have a dozen or more years of experience in the solar industry. And as project sizes grow, there is a shortage of EPCs that can achieve high productivity and deliver cost- efficient projects at greater scale. Rethinking solar project delivery In the coming years, collaboration will be a major theme in renewables, achieved through new approaches to strategic partnerships, risk ownership and contracting, workforce development, and digital and technology adoption. Established
project pipelines are at stake, along with a seat at the table amid growing demand for renewables. More than a dozen megaprojects of more than 500 MW each—enough to power the equivalent of more than 150,000 American homes—are already in the pipeline for 2023–26 (Exhibit 3). Capacity isn’t the only challenge. Because solar construction is relatively simple, efficiency and consistency in installation are critical to preserving margins. There is already a significant performance gap, with smaller players’ productivity lagging
Exhibit 3 Engineering, procurement, and construction company and labor shortages are a top challenge for developers and utilities.
Challenge
High-concern-level issues, % of respondents
Engineering, procurement, and construction company (EPC) and labor shortages
Labor availability
61
EPC pricing
58
EPC capacity
48
Limited access to land and permits
Land and permitting rights
39
Inflation and commodity price volatility
Inflationary impact
32
Commodity volatility
29
Interconnection costs and timeline
Interconnection agreements
26
Supply chain constraints
6
Materials shortages
Note: High concern level = concern levels of 6–8, as rated by respondents. Source: McKinsey Utility, Developer, and EPC Survey, Dec 2022, n = 42
McKinsey & Company
Accelerating the journey to net zero
91
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