New solar capacity decreased in third quarter of 2022, report finds

Published on December 14, 2022 by Dave Kovaleski

Trade barriers and ongoing supply chain constraints led to a decrease in new solar capacity in the third quarter compared to the same period a year ago.

Specifically, the U.S. Solar Market Insight Q4 2022 said the United States added 4.6 gigawatts (GW) of new solar capacity in Q3 2022, down 17 percent year over year.

These same issues are expected to cause a 23 percent decline in solar installations this year compared to 2021, the report, produced by Solar Energy Industries Association (SEIA) and Wood Mackenzie, stated.

Detainments under the Uyghur Forced Labor Prevention Act (UFLPA) are depressing near-term solar installation forecasts and delaying the impact of the Inflation Reduction Act (IRA), Wood Mackenzie analysts said. Further, the U.S. Department of Commerce’s recent decision to apply anti-circumvention tariffs on solar products from Southeast Asia presents a downside risk to future solar deployment.

“America’s clean energy economy is being hindered by its own trade actions,” SEIA president and CEO Abigail Ross Hopper said. “The solar and storage industry is acting decisively to build an ethical supply chain, but unnecessary supply bottlenecks and trade restrictions are preventing manufacturers from getting the equipment they need to invest in U.S. facilities. In the aftermath of the Inflation Reduction Act (IRA), we cannot afford to waste time tinkering with trade laws as the climate threat looms.”

Utility-scale, commercial, and community solar markets were hardest hit, as all experienced quarter-over-quarter declines in the third quarter. The residential solar segment fared much better in the quarter with 1.57 GW of new installations — a 43 percent increase over the third quarter of 2021.

“Installations this year were significantly depressed due to supply chain constraints,” said Michelle Davis, principal analyst and lead author of the report. “It has proven more difficult and time-consuming to provide the proper evidence to comply with the UFLPA, further delaying equipment delivery to the U.S.”

The report forecasts that the utility-scale solar market will add 10.3 GW of new capacity in 2022, representing a 40 percent drop from 2021 volumes. By 2024, growth from the IRA will begin in earnest, with annual solar growth averaging 21 percent between 2023-2027.