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The US Solar Market Insight, Year-in-Review 2023 report, which analyzes the first full year since the passage of the Inflation Reduction Act, shows that the legislation has skyrocketed the sector and will have a lasting economic impact in terms of energy, employment and investment opportunities.
When President Biden signed the Inflation Reduction Act in August 2022, the US solar industry was given the green light to take off, and it has broken records: 32.4 GW of new electric generation capacity last year, or 51% from 2022. According to the US Solar Market Insight, Year-in-Review 2023 report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, it is the first time in 80 years that a renewable electricity source has accounted for more than 50 % of annual capacity additions.
“If we stay the course of our federal clean energy policies, total solar energy deployment will quadruple over the next ten years,” said Abigail Ross Hopper, president and CEO of SEIA. “The Inflation Reduction Act is supercharging solar deployment and having a material impact on our economy, helping the US solar module manufacturing base grow 89% in 2023. We must protect and optimize the policies that are in place. driving these investments and creating jobs, and the stakes in the next election could not be higher.”
According to the reports estimates, total US solar capacity is expected to grow to 673 GW in 2034, or enough to power more than 100 million homes.
This growth comes with some challenges, including high interest rates, tax credit financing, the US supply chain, and interconnectedness. Along with uncertainty surrounding the possibility of a new administration in 2025, the report includes high and low forecast scenarios that show how political and economic factors could affect the solar market over the next ten years, with a difference of 200 GW two forecasts.
The Bull case is based on the possibility of overcoming many of the existing challenges, for example, that interest rates fall and then stabilize, that more companies become providers of fiscal capital, that there are fewer restrictions in the supply chain and that interconnection problems are resolved. The Bear case reverses these assumptions, leading to what the reports authors estimate could be a “swing of 200 GWdc in solar installations over the next decade depending on various political and economic outcomes.”
“An optimistic case for US solar, with greater supply chain stability, more tax credit financing and lower interest rates, would increase our outlook by 17%,” said Michelle Davis, head of global solar. at Wood Mackenzie and lead author of the report. A low case with supply chain constraints, less tax credit funding and static interest rates would reduce our outlook by 24%.” Various political and economic outcomes will have major implications for the US solar industry.”
Supply Chain
One of the challenges of the rapidly growing U.S. solar industry is sourcing domestic content and reducing dependence on imports from China and other countries. Module manufacturing in the United States grew from 8.5 GW to 16.1 GW last year, and established manufacturers have bold plans for future growth. For example, First Solar produced a record 12.1 GW of solar modules, growing 33% over 2022 totals. By the end of 2026, the company expects to have 14 GW of solar capacity in the United States and 11 GW on an international scale, reaching 25 GW of global production of solar modules. Additionally, Qcells recently expanded its solar module factory in Dalton, Georgia, adding 2 GW of solar capacity, bringing factory output to over 5.1 GW. Canadian Solar has set up a manufacturing facility in Texas and expects to produce 5 GW of TOPCon modules annually.
However, module manufacturers looking to establish themselves in the US face some obstacles, including high interest rates and record low prices for modules from abroad.
Market Segments
According to WoodMacs SEIA report, all segments experienced year-over-year growth in 2023, bringing total installed solar capacity in the United States to 177 GW. The utilities sector alone added 22.5 GW of new capacity. Despite challenges in the residential sector, including net energy metering (NEM) policy changes and high interest rates, nearly 800,000 Americans added solar power to their homes.
Partly in response to cuts to NEM policies and partly to ensure resilience, energy storage was added to 13% of residential and 5% of non-residential installations. This figure is expected to rise to 25% of new residential installations this year and double to 10% of non-residential installations.
Leading States
Solar energy has boomed across the country, with more than half of states having 1 GW of total installed solar capacity. Although California was well ahead of the rest of the country in installed solar capacity, Texas leads for the second time in the last three years with 6.5 GW of new solar installations. Californias residential solar market was hit hard by the changes in the NEM, with the reports authors predicting a 36% decline across all segments in the state. Colorado, Ohio and Wisconsin are the rising stars of solar energy in the US, and will enter the top 10 solar states in 2023.
Looking ahead, the Year in Review report predicts that solar energy will almost quadruple, going from 177 GWdc installed at the end of 2023 to 673 GWdc installed in 2034, and that by 2040 it will constitute the majority of the electricity generation capacity of USA. |
