U.S. solar industry sees record installations in first quarter
The U.S. solar industry posted its best first quarter in history, as some 6.1 gigawatts (GW) of solar capacity was installed in the quarter, according to the U.S. Solar Market Insight report released by the Solar Energy Industries Association (SEIA) and Wood Mackenzie.
The record quarter was driven primarily by supply chain challenges abating and delayed solar projects moving forward.
Specifically, the utility-scale market had a strong first quarter with a record 3.8 GW of installed solar capacity. A key driver was that more module importers were able to satisfy the documentation requirements under the Uyghur Forced Labor Prevention Act (UFLPA). This allowed more solar equipment to make it to project sites and allowed the industry to build out its long pipeline of delayed projects.
Also, the residential segment installed 1.6 GW of solar capacity in Q1 2023, a 30 percent increase from Q1 last year. This was significant, given the rising interest rates and economic headwinds. The residential market segment is on track to add 36 GW of solar over the next five years, growing at an average annual rate of 6 percent.
The commercial market also had a record first quarter, with 391 MW installed, putting the segment on track for 12 percent growth in 2023. Meanwhile, the community solar segment installed 212 MW, a 13 percent drop from Q1 2022 due mainly to ongoing interconnection challenges.
Florida was the top solar state in the first quarter, driven by 1.46 GW of utility-scale solar installations. Florida installed about 70 percent more solar capacity in Q1 than the next highest state, California. Overall, the solar industry accounted for 54 percent of all new electricity-generating capacity added to the grid in the first quarter.
The report also predicts a surge in the solar market over the next five years, with an expectation that it could triple in size to 378 GW by 2028. This projected increase is due in large part to the Inflation Reduction Act (IRA), which has spurred a surge of new manufacturing announcements. Domestic module capacity is expected to rise from fewer than 9 GW today to more than 60 GW by 2026. Currently, 16 GW of module manufacturing facilities are under construction as of the end of Q1 2023.
It should be noted that the law contains new credits that can be used in conjunction with the solar Investment Tax Credit, like the domestic content, energy communities, and low-income adder credits. In particular, the energy communities and low-income adder guidance will help drive solar and storage investment in underserved communities.
“As the Inflation Reduction Act begins to flex its muscle and drive demand, the U.S. solar and storage industry is eagerly awaiting further guidance on some of the most impactful pieces of the law,” Abigail Ross Hopper, SEIA president and CEO, said. “Timely, specific, and workable implementation guidance from the administration will have a major impact on our success in both the near and long-term. This guidance is powerful, and if done correctly, it could unlock new market potential across the country.”
While the IRA has already catalyzed major investments in solar manufacturing and deployment, there are challenges with the implementation guidance for the domestic content adder credits in the near-term.
