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Solar Capacity Installation Hits All-Time High, Wood Mackenzie Predicts Tripling Market Size
According to the recently released U.S. Solar Market Insight Q2 2023 report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, the U.S. solar industry experienced a record-breaking first quarter, installing 6.1 GW of solar capacity. This remarkable performance was largely attributed to the resolution of supply chain challenges and the progression of delayed solar projects.
Wood Mackenzie’s projections indicate that the solar market is expected to triple in size over the next five years, reaching a total installed capacity of 378 GW by 2028. However, the report also highlighted a 13% decrease in the installation of community solar, primarily due to ongoing interconnection difficulties.
The implementation of the 2022 Inflation Reduction Act led to a surge in new manufacturing announcements, with expectations of domestic module capacity increasing from under 9 GW to over 60 GW by 2026. As of the end of the first quarter, approximately 16 GW of module manufacturing facilities were under construction.
One of the persistent challenges faced by the industry is the scarcity of qualified Engineering, Procurement, and Construction (EPC) companies to meet the soaring demand for solar projects. The Inflation Reduction Act’s incentives exacerbate this shortfall, leading to a shortage of skilled workers. Moreover, while the Biden administration provided some clarity on the application of the IRA’s adder credits, issues remain with the implementation guidance for the domestic content adder credits, particularly in the residential market segment.
On a positive note, the utility-scale market rebounded from a difficult 2022, witnessing a record 3.8 GW of installed solar capacity. The residential segment also experienced significant growth, adding 1.6 GW of solar capacity in the first quarter, while the commercial market achieved a record first quarter with 391 MW installed.
Florida emerged as the leading solar state during the first quarter, surpassing California in utility-scale solar installations. In fact, the solar industry accounted for 54% of all new electricity generating capacity added to the grid during the quarter.
Overall, the U.S. solar industry demonstrated strong momentum and promising growth potential, albeit with some challenges to address and regulatory guidance to refine.
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