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The solar industry is no stranger to ups and downs. In 2022, the industry experienced a 16% decline in solar installations. However, experts are predicting a rebound in 2023, and solar energy is poised to become an increasingly vital component of the energy sector. This resurgence in solar energy presents a host of opportunities and challenges for businesses, governments, and consumers alike. In this blog post, we’ll explore the reasons behind the downturn, the factors contributing to the rebound, and what the future of solar energy looks like in a post-pandemic world.
What Are The Facts?
Solar industry analysts predict a rebound in the solar industry in 2023 following a 16% decline in installations in 2022. However, the future remains uncertain, and Wood Mackenzie has outlined three possible scenarios. The difference between these scenarios is minor, with only about a 10% variance between them.
Lead distributed solar analyst Michelle Davis notes that the solar industry could see a surge in projects if the enforcement of the Uyghur Forced Labor Prevention Act eases up and if the IRS publishes guidance on implementing the Inflation Reduction Act before the end of the year.
According to a joint report from the Solar Energy Industries Association and Wood Mackenzie, solar installations in the United States declined by 16% in 2022, with total installations reaching 20.2 GW. However, analysts at Wood Mackenzie are hopeful that the solar industry will rebound in 2023, with projected growth of 41% and installations reaching 28.4 GW.
Despite this optimistic outlook, there is a significant amount of uncertainty facing the industry, particularly related to supply chain disruptions caused by the Uyghur act. Wood Mackenzie anticipates that enforcement of the act will ease up in the second half of 2023, but it remains unclear whether this will happen.
Inflation Reduction Act
The qualification for investment tax credit adders created by the Inflation Reduction Act is also in question. Wood Mackenzie is tracking planned solar manufacturing projects that could potentially increase domestic capacity, but it’s likely that some of the announced facilities may be delayed or not built at all.
Additionally, the U.S. solar industry could install more than 50 GW of solar per year by 2027, or installations may stall at around 30 GW per year. Despite the various factors affecting the industry’s future, Davis from Wood Mackenzie said that the difference in outcomes between the scenarios is relatively small.
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