The US solar industry installed 6.1 GW of solar capacity and had its best first quarter on record, according to the US Solar Market Insight Q2 2023 report released today by the Solar Energy Industries Association (SEIA) and Wood Mackenzie. The record quarter was driven in large part by supply chain challenges that slowed and delayed progress on solar projects.
Partly due to strong first-quarter numbers and an increase in demand from the Inflation Relief Act (IRA), Wood Mackenzie expects the solar market to triple over the next five years, bringing total installed solar capacity to 378 GW by 2028.
The IRA has also spurred a surge in new manufacturing announcements, with domestic module capacity expected to rise from less than 9 GW today to 60 GW by 2026. As of the end of the first quarter, at least 16 GW of module production is under construction. in 2023
This quarter, the Biden administration provided some clarity on how the landmark law’s additional credits will be applied. The law contains new credits that can be used in conjunction with the solar investment tax credit, such as indoor, energy community and low-income cash credits. In particular, energy communities and low-income aggregator referrals will help promote solar and storage investments in underserved communities.
“As the deflationary law begins to flex its muscles and stimulate demand, the US solar and storage industries look forward to further guidance on some of the most impactful parts of the law,” said SEIA President and CEO Abigail Ross Hopper. “Timely, concrete and actionable implementation guidance from the administration will have a major impact on our success both in the near term and in the long term. This guidance is powerful and, if done right, could unlock new market potential across the country.”
Although the IRA has already made major investments in solar production and deployment, challenges remain in the near-term implementation of domestic content increase credits.
Because the rules for qualifying for the domestic content addition credit are complex and there is currently no production of crystalline silicon solar cells in the United States, it may be several years before the credit is widely used. The rules also do not provide specific directions for the residential market, leaving this market segment without clarity.
“The US solar industry is slowly starting to see supply chain relief,” said Michelle Davis, head of global solar at Wood Mackenzie and lead author of the report. “At the same time, qualifying for the addition of domestic content will be a very difficult process for solar project developers. Even when the production of crystalline silicon cells is established, many other components must be produced domestically before projects can be qualified.”
The utility-scale market rebounded from a challenging 2022 with a strong first quarter and a record 3.8 GW of installed solar capacity. More module importers were able to meet Uyghur Forced Labor Prevention Act (UFLPA) documentation requirements this quarter. This enabled more solar equipment to reach project sites and allowed the industry to build its long pipeline of delayed projects.
Despite rising interest rates and economic headwinds that caused customer volatility, the residential sector installed 1.6 GW of solar capacity in Q1 2023, up 30% from Q1 last year. The residential market segment is on track to add 36 GW of solar over the next five years, with average annual growth of 6%.
The commercial market also had a record first quarter with 391 MW installed, putting the segment on track for 12% growth in 2023. Meanwhile, the community solar sector installed 212 MW, a 13% decline from Q1 2022, largely due to continuity. connectivity challenges.
So far, Florida was the top solar state in Q1 2023 with 1.46 GW of utility-scale solar installations. Florida installed more than 70% more solar capacity in Q1 than the next highest state, California.
Thanks in part to those installations, the solar industry accounted for 54% of all new electricity generating capacity added to the grid in 1Q.
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