US Solar Market Growth Update

Solar Market Growth: A Report of the US Solar Industry 

Each quarter, the Solar Market Insight Report provides a detailed picture of where the US solar industry is headed. The report is developed by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, and it provides plenty of interesting data: total megawatts installed during the latest quarter, average solar prices by market segment, growth forecasts, etc. The report also analyzes current opportunities and threats that could shape the US solar power industry.

The latest SMI report was published on June 7, 2022, and it  provides a mixed picture. The home solar market had the best quarter on record, and the federal government is considering an increase and extension of the Investment Tax Credit. On the other hand, the utility scale solar market has slowed down, and there is uncertainty in the industry due to an ongoing investigation by the US Department of Commerce:

• The investigation deals with an alleged import tariff circumvention by Chinese solar manufacturers who have operations in Cambodia, Malaysia, Thailand, Vietnam.
• The US imports 80% of solar panels from those four countries, and project developers are concerned about the potential introduction of new anti-dumping and countervailing duties (AD/CVD) of up to 250%.

Overall, the US deployed 3.9 GW of solar capacity during Q1 2022, and this accounts for 50% of total capacity added across all generation technologies, renewable and non-renewable. The US has now surpassed 125 GW of solar capacity, which is enough for 22 million homes.

Home Solar Power Had the Best Quarter On Record

According to the SEIA and WoodMac, the US installed 1,247 MW of new home solar systems during the first quarter of 2022. This exceeds the previous record of 1,156 MW, reached during the last quarter of 2021. New residential installations are heavily concentrated in three states, which account for more than 50% of growth: Texas, Florida and California.

The outlook for home solar power would improve if the US government passes a federal reconciliation bill that is currently being discussed. The 26% solar tax credit, which is currently set to expire in 2024, would be increased back to 30% and extended once more.  The proposed bill also includes solar manufacturing tax credits, which would help expand the current production capacity of 11 GW.

With a tax credit extension and more local manufacturing, the US solar country could mitigate the impact of external supply chain issues. Domestic production is also unaffected by trade policy factors like the DOC anti-circumvention investigation.

Utility-Scale Solar Power: Vulnerable to Supply Chain and Trade Policy Issues

Unfortunately, the short term outlook for the utility-scale solar market is less favorable compared with the residential sector. Only 2,173 MW were installed in Q1 2022, which represents a 64% drop from the previous quarter.

• The SEIA had previously forecast 14.7 GW of new utility-scale solar capacity for 2022.
• As a consequence of the Dept. of Commerce investigation, the 2022 growth forecast has now been reduced to only 8.7 GW.

As a result of supply chain disruptions and import tariff uncertainty, 17.6 GW of projects have been delayed for a year or more, and 450 MW have been canceled. The important tariff investigation alone is responsible for 12 GW of project delays, according to the SEIA and WoodMac. However, they remain optimistic in their five-year forecasts: the US is expected to install 112 GW of utility-scale solar capacity between 2022 and 2027.

The commercial and community solar markets are much smaller, with 317 MW and 197 MW installed in Q1 2022, respectively. The commercial solar segment has slowed down compared with one year ago, with 11% less capacity installed, but the community solar segment has actually grown by 16% year-over-year.