- US solar installations in Q2/2022 could have been higher than 4.6 GW DC had it not been for challenges related to supply chain uncertainty surrounding anti-circumvention investigation
- Utility scale solar was hugely impacted as it added only 2.7 GW DC this quarter even as the segment signed the largest amount of new contracts since 2019 with over 10 GW DC
- As full benefits of the IRA take time to reflect, until at least 2024, UFLPA will continue to play a role by delaying module shipments
- In 2022, the US is likely to add its lowest annual since 2019 with 15.7 GW DC, but the outlook for next 5 years is rosy
Supply chain constraints and uncertainty surrounding anti-circumvention investigation pulled down US solar additions in Q2/2022 by 12% YoY to 4.6 GW DC. Despite the Uyghur Forced Labor Prevention Act (UFLPA) limiting PV deployments through 2023, the next 5 years will turbocharge the market, thanks to the Inflation Reduction Act (IRA), according to a new report.
The latest quarterly edition of US Solar Market Insight Q3 2022 report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie expects the IRA to help the US market grow 40% over baseline projections through 2027 which will be equal to 62 GW DC of additional solar capacity (see Inflation Reduction Act 2022 Now A Law).
Over the next 5 years, utility scale PV is to bring in 162 GW DC new capacity. At the end of 2027, the US will grow its cumulative installed solar PV capacity to 336 GW DC, from 129 GW DC now, as per new projections.
However, analysts don’t see the full benefits of the IRA until at least 2024 hence their expectations for 2022 installations aren’t too high especially since supply chain constraints are likely to remain constant through 2023 as UFLPA leads to module shipment constaints.
The report writers guide for 2022 solar installations in the US as 15.7 GW DC the ‘lowest total since 2019’ for the US market.
Of the 4.6 GW DC capacity reported for this quarter, 2.7 GW DC came from the utility scale segment reflecting 25% annual drop and 17% sequential increase. Installations were impacted by supply chain and trade policy issues. Nonetheless, over 10 GW DC of new contracts were executed by the utility scale segment, the largest since 2019, taking the cumulative pipeline to 88 GW DC. It is 10% higher than 80.6 GW DC in Q1/2022 (see US Installed 3.9 GW DC Solar In Q1/2022).
For 2022, the report predicts this segment to bring online its lowest annual total since 2018 with 8.1 GW DC which is a drop of 600 MW DC from previous guidance.
But “increased polysilicon capacity outside of the Xinjiang region, diversification of module supply, materialization of domestic production plans, and continued high demand for renewable projects will lead to a total buildout of 162 GW DC of utility-scale projects throughout the forecast period,” reads the report.
With an annual growth of 37% and sequential improvement of 7%, the residential solar PV segment brought online 1.358 MW DC (see US Installed 5.7 GW DC New Solar In Q2/2021). Growth is attributed to increasing retail electricity rates in an inflationary environment along with extreme weather events causing power outages.
The commercial solar segment, comprising distributed solar projects for all offtakers excluding community solar, went down 7% YoY and up 13% QoQ to 336 MW DC. Again supply chain constraints and anti-circumvention investigations are blamed for annual drop in numbers.
“Compared to our outlooks without the passage of the IRA, our revised outlooks add more than 2 GW DC of additional commercial solar between 2023 and 2027,” the report writers add.
Factors that impacted the commercial solar segment, also negatively impacted the US community solar segment with 228 MW DC down 15% from last year and 2% from last quarter. In H1/2022, Maine and New York states accounted for 72% of all additions in this segment.
The report reads, “Even as supply chain constraints slowed the market, solar accounted for 39% of all new electric generating capacity additions in the first half of 2022. The US solar market now represents about 4.5% of the nation’s electricity mix.”
The report can be purchased on Wood Mackenzie’s website for $7,000.