US smashes solar records in 2023 – but 2024 will bring road bumps
The US is expected to add a record-setting 33 gigawatts (GW) of solar capacity in 2023, according to a new report, but 2024 will bring challenges to the industry.
The Solar Energy Industries Association (SEIA) and Wood Mackenzie released their latest report, “US Solar Market Insight Q4 2023,” in which they report that third-quarter (Q3) additions of new solar totaled 6.5 gigawatts (GW) – a 35% year-over-year increase – as federal clean energy policies begin to take hold.
California and Texas led the US for new solar installations in Q3, and Indiana ranked third with 663 megawatts (MW) of new capacity as several large utility-scale projects came online. Fourteen states and Puerto Rico installed more than 100 MW of new solar capacity in Q3.
While economic challenges are beginning to impact the solar and storage industry, solar is still expected to be the largest source of generating capacity on the US grid by 2050.
SEIA president and CEO Abigail Ross Hopper said:
Solar remains the fastest-growing energy source in the United States, and despite a difficult economic environment, this growth is expected to continue for years to come.
To maintain this forecasted growth, we must modernize regulations and reduce bureaucratic roadblocks to make it easier for clean energy companies to invest capital and create jobs.
The residential solar segment installed a record 210,000 systems in Q3. However, the California Public Utilities Commission’s disastrous decision to gut the state’s rooftop solar incentives –resulting in an 80% drop in installations – and elevated US interest rates are expected to lead to a brief decline next year before growth resumes in 2025.
Elevated financing costs, transformer shortages, and interconnection bottlenecks are also impacting the utility-scale segment, which saw its lowest level of new contracts signed in a quarter since 2018.
However, improvements in the module supply chain have led to a record 12 GW of utility-scale deployment in the first nine months of 2023.
Solar accounts for 48% of all new electric generating capacity in the first three quarters of 2023, bringing total installed solar capacity in the US to 161 GW across 4.7 million installations. By 2028, US solar capacity is expected to reach 377 GW – enough to power more than 65 million homes.
Michelle Davis, head of solar research at Wood Mackenzie and lead author of the report, said:
The US solar industry is on a strong growth trajectory, with expectations of 55% growth this year and 10% growth in 2024.
Growth is expected to be slower starting in 2026 as various challenges like interconnection constraints become more acute. It’s critical that the industry continue to innovate to maximize the value that solar brings to an increasingly complex grid.
Interconnection reform, regulatory modernization, and increasing storage attachment rates will be key tools.
Solar breaking capacity records in 2023 doesn’t surprise me – thank you, Inflation Reduction Act – but it certainly makes me happy to hear it from the SEIA. The solar industry is still going to grow in 2024, just not as quickly as it did this year.
There are a lot of moving parts in this revolutionary transition to clean energy, and next year, the industry and its supply chain is going to have to recalibrate on some important stuff.
There’s nothing it can do about the interest rates, and I don’t know how California is going to sort out its mess. But there are innovative startups coming up with better ways to calibrate the power on the grid, and those ideas are being launched commercially. As Davis says, interconnection reform and regulation improvements are needed to help ease the clean energy bottlenecks. Hopefully those bottleneck issues will be improved by government sooner rather than later.
Read more: Here’s what the US needs to do right now to upgrade the grid
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