Record Solar Installations in 2023 Due to Inflation Act
TL/DR –
For the first time in 80 years, a renewable electricity source has accounted for over 50% of annual capacity additions. Total U.S. solar capacity is predicted to grow to 673 GW by 2034, enough to power over 100 million homes, and total solar deployment could quadruple over the next decade with continued clean energy policies. Several factors, such as trade policy, tax credit financing, and interest rates, may affect the future of the U.S. solar industry, highlighting a 200 GW difference between the high- and low-case forecasts by 2034.
Record Levels in Renewable Electricity by Solar Energy
For the first time in 80 years, a renewable power source, solar, accounts for over half of annual electricity capacity additions. The Solar Energy Industries Association (SEIA) president, Abigail Ross Hopper, anticipates a quadruple increase in total solar deployment in the coming decade due to federal clean energy policies such as the Inflation Reduction Act. Indeed, US solar module manufacturing base is predicted to grow 89% in 2023 due to these policies.
Forecasted Growth of Solar Capacity
By 2034, U.S. solar capacity is projected to reach 673 GW, powerful enough to light up over 100 million homes. However, several variables may affect this figure, including interest rates, tax credit financing, trade policy, supply chain availability, and election outcomes. The difference between high-case and low-case forecasts stands at a considerable 200 GW.
Impacts of Economic and Policy Factors on Solar Industry
Michelle Davis, head of global solar at Wood Mackenzie, underscores that a high case scenario with a robust supply chain, more tax credit financing, and lower interest rates could raise the solar outlook by 17%. Conversely, a low case scenario with supply chain issues, reduced tax credit financing, and static interest rates could slash the outlook by 24%. Thus, policy and economic outcomes bear significant implications for the U.S. solar industry.
U.S. Solar Module Manufacturing Capacity
U.S. saw a growth in solar module manufacturing capacity from 8.5 GW to 16.1 GW in 2023. However, record-low module prices and a tough economic environment might hinder manufacturers’ planned facilities. Interestingly, the U.S. currently lacks any operational ingot, wafer, or cell manufacturing facilities, presenting a potential growth area.
Year-Over-Year Growth in Solar Market Segments
All solar market segments experienced growth in 2023, resulting in a total installed solar capacity of 177 GW in the U.S. The utility-scale sector alone contributed 22.5 GW of new capacity, with nearly 800,000 Americans adding solar to their homes.
Growth in Energy Storage Use
In 2023, solar + storage accounted for 13% and 5% of residential and non-residential installations respectively. These figures are projected to increase to 25% and 10% respectively in 2024. This underscores the growing use of energy storage across the country.
Leading States in New Solar Installations
Texas surpassed California for the second time in three years by installing 6.5 GW of new solar capacity. California’s residential solar market is projected to struggle in 2024 due to changes in net metering policies. Meanwhile, Wisconsin made its debut in the top 10 solar states while Colorado and Ohio reappeared after a decade. Over half of U.S. states now boast 1 GW of total installed solar capacity.
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