Solar installations will almost triple over the next five years: VSM

The U.S. solar market will nearly triple over the next five years after President Joe Biden signed the largest climate bill in U.S. history, according to a new report from the Solar Energy Industries Association and Wood Mackenzie.

The report, published Thursday, predicts the US market will grow 40% more than previous forecasts by 2027, following supportive legislation.

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“The Inflation Reduction Act has given the solar industry the most long-term certainty it has ever had,” Michelle Davis, principal analyst at Wood Mackenzie, said in a statement.

“Ten years of investment tax credits are in stark contrast to the one-, two- or five-year extensions the industry has experienced over the past decade. It’s not an overstatement to say that the IRA will usher in a new era for the U.S. solar industry “, she added.

The report pegs total solar installations in market segments growing from 129 gigawatts (GW) today to 336 GW over the next five years.

But in the near term, the report said issues plaguing the industry, including supply chain delays, will continue to limit growth.

During the second quarter of 2022, the industry installed 4.6 GW of new solar, down 12% year over year but up 12% from the first quarter. For full-year estimates, 15.7 GW have now been added, which would be the lowest annual total since 2019.

The report attributed much of the recent slowdown to the Commerce Department’s investigation into dumping and countervailing duties on solar imports from Cambodia, Malaysia, Thailand and Vietnam. In June, the White House suspended new solar tariffs for two years, but months of uncertainty stalled new solar installations as developers waited for clarity on future policies.

“Across the solar industry, second quarter volumes would have been higher if not for supply chain constraints and the industry-wide slowdown from March to June caused by the initiation of the anti-avoidance investigation,” the report said. .

Utility-scale solar was the hardest hit, with second-quarter installations down 25% year-over-year. However, the 2.7 GW of new capacity was up 17% compared to the first quarter. For the full year, Wood Mackenzie predicts utility-scale solar will see its weakest year since 2018.

One bright spot during the second quarter was residential solar. The segment set its fifth quarterly record, with 1.36 GW installed. The number, which is an increase of 37% year-on-year, represents about 180,000 new customers.

The increase comes amid more frequent network outages. California has asked residents to cut back on usage as record temperatures push energy demand to new highs. Extreme weather events fueled by climate change have also plagued the grid. Electricity prices are also jumping on the back of rising commodity prices, which is pushing consumers towards solar power.