The Solar Energy Industries Association (SEIA) and Wood Mackenzie research group have unveiled a report projecting substantial growth in the US solar sector, with expectations of adding a record 33 GW of new generation capacity in 2023. This marks a remarkable 55% increase from the previous year.
Despite the forecasted slowdown in growth in the coming year due to economic and interconnection challenges, solar energy is poised to become the predominant source of generating capacity on the US power grid by 2050, according to the report released on December 7. Government policies supporting solar power are cited as a key driver behind the industry’s ascent.
SEIA President and CEO, Abigail Ross Hopper, emphasized the continuous growth of solar energy in the US, stating, “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.”
The report outlines that solar accounted for 48% of all new electric generating capacity in the US during the first nine months of the current year. The total installed solar capacity stands at 161 GW from approximately 4.7 million installations. By 2028, the US solar power generation capacity is projected to reach 377 GW.
While acknowledging the strong growth trajectory, the report also highlights potential challenges. The industry is expected to face a slowdown starting in 2026, with interconnection bottlenecks and transmission capacity constraints dampening installation rates. The authors stress the importance of continued innovation to maximize solar’s value in an increasingly complex grid, emphasizing key tools such as interconnection reform, regulatory modernization, and increased storage attachment rates.
Concerns for 2024 arise due to policy changes in states like California, impacting the residential solar segment. Changes to net energy metering policy in California, effective from April, reduce the profitability of sending power back to the grid for solar customers, potentially affecting the market dynamics.
The report also highlights the impact of higher interest rates, increasing financing costs for solar power systems and adversely affecting adoption, particularly in the residential market. The authors predict a potential 12% decrease in residential installations next year due to higher financing costs, with growth expected to resume in 2025.
In conclusion, the report underscores the robust growth outlook for the US solar industry, projecting an average annual growth rate of 14% over the next five years. However, sustained growth might face challenges in the longer term, necessitating ongoing industry innovation.