The US installed 6.1 GW DC new PV capacity in Q1/2023, a 47% annual jump, according to the Solar Energy Industries Association (SEIA) and Wood Mackenzie that brand it the best 1st quarter in the industry's history, and thanks to the policy certainty provided by the Inflation Reduction Act (IRA) forecast it to nearly triple in size by 2028.
The report writers attribute record growth in the reporting quarter to be driven in large part by supply chain challenges easing and delayed projects moving forward.
Even though the 6.1 GW DC was a drop of 19% from the previous quarter, the US Solar Market Insight Q2 2023 report from the duo says the capacity was led by delayed utility scale projects coming online. The utility scale segment too had its best 1st quarter ever with 3.8 GW DC coming online, having gone up 66% YoY, but down 23% QoQ.
Residential segment increased 30% annually but dropped 3% sequentially with 1.6 GW DC. Apart from typical seasonality, this segment was affected by the intense rainstorms in California and significant economic headwinds. In 2023, the report forecasts 8% growth for this segment thanks to backlogs even though there will be 38% reduction in California in 2024, leading to a 4% national market contraction.
Commercial solar segment brought online 391 MW DC, growing 27% annually, shrinking 19% sequentially which shows it is recovering from supply chain constraints. The report forecasts 12% annual growth for this segment in 2023 and 13% in 2024, before dynamics around California's NEM 3.0 policy bring down installations in 2025 and 2026.
Community solar PV segment installed 212 MW DC, dropping 13% YoY and 45% QoQ. The national decline was led by 32% drop in New York. Yet, report writers remain positive of this segment doing well and forecast over 1 GW new capacity additions in 2023.
Manufacturing
Since the IRA was announced, according to the report, 20 GW of new cell and 52 GW of new module manufacturing facilities have been announced till the end of Q1. It counts at least 16 GW of module manufacturing fabs to be under construction as of Q1-end.
The US market is operating less than 9 GW domestic solar module manufacturing capacity at present, which the report writers expect to rise to more than 60 GW by 2026 along with 20 GW for cell which is currently non-existent in the country.
Wood Mackenzie believes more clarity is needed on the incentives in the IRA to ensure a project can qualify for the same when using domestically produced components. However, it argues that for a project to qualify for these incentives will be challenging without modules that use domestically generated cells.
It further explains, "Even with domestic solar cells, there will need to be sufficient domestic manufacturing capacity of multiple other components (glass, frames, junction boxes, encapsulants, components of inverters, etc.) for developers to meet the requirements."
Forecast
At the end of 2022, US' aggregate installed solar PV capacity was 142 GW DC. Spurred by the IRA, between 2023 and 2028 analysts forecast the market to add 236 GW DC, taking the total to 378 GW.
SEIA President and CEO Abigail Ross Hopper says the US solar and storage industry is awaiting further guidance and clarity on the IRA.
She adds, "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."
The full report can be purchased from Wood Mackenzie's website.
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