The US solar market is experiencing an unprecedented surge, as highlighted in the recent Solar Market Insight Q2 Report by the Solar Energy Industries Association (SEIA) and energy research consultancy firm Wood Mackenzie. The full report contains a wealth of insights, data, and graphs, but here are some takeaways that forecast a new era of success for the renewable energy industry.
Solar Industry Growth is Skyrocketing Thanks to the Inflation Reduction Act
The report showcases the remarkable growth of the US solar market, with the first quarter of the year registering a record-breaking 6.1 GW of solar capacity. This milestone demonstrates the increasing adoption of solar energy by residential, commercial, and utility-scale customers thanks to August 2022’s landmark Inflation Reduction Act, which extended the 30% Investment Tax Credit and introduced new incentives and adders for domestic manufacturing and environmental justice efforts. Since the Biden administration released additional clarifications on the qualifications for adders earlier this year, we expect demand to continue to rise. Wood Mackenzie forecasts that the solar market will triple over the next five years.
The Solar Supply Chain is Starting to Stabilize
Supply chain stability ensures smoother project execution, minimizes delays and uncertainties, and fosters confidence among developers, installers, and consumers alike. Though the solar market has experienced instability in the past year due to supply chain constraints and the lingering threat of solar tariffs, the report suggests conditions are improving. Module shipments from overseas are finally arriving at port, and domestic manufacturing efforts are on the rise to accommodate adders in the IRA for using US-made equipment. Domestic module manufacturing is estimated to increase from 9 GW today to more than 60 GW by 2026. Projects delayed due to supply chain constraints in 2022 were able to proceed in Q1 2023, which also contributed to that quarter’s record growth. As domestic manufacturing grows and catches up to increased demand, we should see continued stability for solar supply chain.
Commercial Solar is on the Rise
The Wood Mackenzie report outlines increases in residential, utility scale, and commercial solar. Notably the commercial solar segment installed 391 MW, growing 27% year-over-year. While the report anticipates 12% growth through 2024, there is an expected decline due to California’s new NEM 3.0 program. California retired its old net metering program and replaced it with a time-of-use program which, when uncoupled from a battery energy storage system, has less impactful incentives. Considering the size of the California solar market, any drop-off in installations could impact the national market. However, other markets are growing, with Texas and Florida just behind California in cumulative solar capacity. The benefits of solar for energy savings, ESG, and resiliency make it an increasingly attractive option, and over 10,000 businesses in the US are becoming part of this growing trend for renewable energy adoption.
Source: SEIA Solar Industry Data Cheat Sheet
We’ve covered the increasing adoption of solar energy, stabilization of supply chains, and trends in the commercial solar market, but we encourage you to download the full report to learn more. Empower Energies utilizes these insights as we develop turnkey solutions for businesses looking to join the growing movement toward solar adoption, whether it’s to increase their energy savings, resiliency, or address ESG goals. Get in touch with us to learn more.