Texas expected to add significant solar capacity over next two years

Texas is expected to add 10 gigawatts (GW) of utility-scale solar capacity by the end of 2022, making it one of the fastest-growing and largest markets for solar power.

According to the Energy Information Administration, about one-third of the utility-scale solar capacity planned to come online in the United States in the next two years, about 30 GW, will be in Texas.

California currently has the most installed utility-scale solar capacity of any state, but Texas is catching up. California is expected to add 10 gigawatts (GW) of utility-scale solar capacity by the end of 2022, far short of what Texas is adding.

There was 2.5 GW of solar capacity installed in Texas in 2020 marked the beginning of the solar boom in the state. EIA expects another 4.6 GW of solar capacity to be added in 2021 and 5.4 GW in 2022. By the end of 2022, Texas will have 14.9 GW of installed solar capacity.

Much of the anticipated growth is being driven by the federal solar Investment Tax Credit (ITC), which is available to project developers. Utility-scale solar projects that start construction in 2021 or 2022 are eligible for a 26 percent tax credit. The tax credit drops to 22 percent for projects started in 2023 and 10 percent for projects started in 2024 or later. Lower solar technology costs and plentiful sunlight, particularly in West Texas’s Permian Basin, where about 30% of the state’s planned solar capacity will be built, are also driving forces.

Utility-scale solar only made up about 4 percent of the state’s generating capacity in 2020 and 2 percent of in-state electricity generation. Natural gas made up 53 percent of Texas’s capacity in 2020 and 52 percent of in-state generation, while wind made up 23 percent of capacity and 20 percent of in-state generation.

However, between 2020 and 2022, almost half of the additions will be solar, more than wind at 35 percent and natural gas at 13 percent.