US On Course For Record 32 GW Solar Capacity Additions in 2023

A new report from the US solar lobby Solar Energy Industries Association (SEIA) and Wood Mackenzie predicts a record addition of 32 GW of new capacity in 2023, a 52% increase from 2022. The US Solar Market Insight Q3 2023 report paints a positive picture of growth for the sector, especially with the IRA (Inflation Reduction Act) incentives also kicking in for the next few years.

The US solar market growth is creditable when we consider how it has been hampered in recent years by supply chain challenges brought on by the COVID-19 pandemic, exacerbated by restrictive trade policy in terms of sourcing equipment from China in particular. While policies in the Inflation Reduction Act (IRA) have helped, easing China-linked restrictions, especially on bifacials, has done its part, too. Wood Mackenzie expects total operating solar capacity to grow from 153 GW today to 375 GW by 2028. That’s about 40 GW each year from 2024 onwards.

“The United States is now a dominant player in the global clean energy economy and states like Florida, Texas, Ohio, and Georgia are at the forefront of this job growth and economic prosperity,” said SEIA president and CEO Abigail Ross Hopper. “The solar and storage industry is delivering abundant clean energy that is generating tens of billions of dollars of private investment, and this is just the tip of the iceberg.”

From 175 GW to 375 GW by 2028

New domestic manufacturing investments are also expected to improve supply conditions over the next few years. If these factory announcements materialize, by 2026, US solar module manufacturing output will be ten times greater than it is today. That is, from 10.6 GW approximately today to over 105 GW by 2026, if all the announcements made fructify, as seems likely.

The utility-scale and residential solar markets led the way with new capacity additions in Q2, growing by 3.3 GW and 1.8 GW, respectively. This marks the largest quarter of growth for the residential solar market in history as customers in California rushed to install solar before changes to net metering rules took effect.

The commercial solar market declined in Q2 primarily due to project interconnection backlogs and a hesitancy to move forward with projects before having full clarity on the IRA’s tax credit adders. 

Despite these challenges, increasing energy prices in certain states are driving demand in the commercial solar market, and the sector is expected to grow by 11% in 2023. Overall, the US has already brought online 12GW of new capacity in the first half of this year, compared to around 8GW brought online in the first half of 2022.

Florida continues to dominate the 2023 state solar rankings, installing 2.5 GW of new capacity in the first half of this year. This is 52% more than the next highest state of California, and already more solar capacity than Florida has ever installed in a single year.

Areas For Concern Remain

The report claims that the disruptions to the established supply chain of China-to-US solar module trade have negatively impacted the US sector. It estimates that the global average selling price for PV modules has decreased by US$0.01-0.03 per watt in the last six months as China sought and discovered markets beyond the US for entry. Prices are expected to fall a further 10-12%, but the tariffs and taxes on Chinese imports into the US might not allow US buyers to benefit.

The commercial and community solar segments have disappointed, though, with a decline of 9% and 16% in terms of new capacity, respectively, in the second quarter of this year, compared to the second quarter of 2022.