US Solar Market Surges in Record-Breaking First Quarter, Fueled by Stable Supply Chains and Inflation Reduction Act, Finds SEIA and Wood Mackenzie

According to the US Solar Market Insight Q2 2023 report, released by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, the US solar industry experienced its best first quarter ever, installing 6.1 gigawatts (GW) of solar capacity. This record-breaking quarter was driven by the easing of supply chain challenges and the progression of delayed solar projects. Furthermore, Wood Mackenzie predicts that the solar market will triple in size over the next five years, with a total installed capacity of 378 GW by 2028.

The surge in demand can be attributed, in part, to the Inflation Reduction Act (IRA), which has stimulated new manufacturing announcements and is expected to boost domestic module capacity from under 9 GW to over 60 GW by 2026. The IRA also includes credits such as the domestic content, energy communities, and low-income adder credits, which will facilitate solar and storage investment in underserved communities. However, while the IRA has led to significant investments in solar manufacturing and deployment, challenges remain in implementing the domestic content adder credits, particularly in the residential market segment.

The report highlights that the utility-scale market had a strong first quarter, with a record 3.8 GW of installed solar capacity, rebounding from a challenging 2022. The residential segment also experienced growth, installing 1.6 GW of solar capacity, a 30% increase compared to the same period last year. The commercial and community solar segments also performed well, with record installations of 391 MW and 212 MW, respectively.

Florida emerged as the top solar state in Q1 2023, surpassing other states with 1.46 GW of utility-scale solar installations. Overall, the solar industry accounted for 54% of all new electricity-generating capacity added to the grid in the first quarter.

Wood Mackenzie’s head of global solar, Michelle Davis, emphasized that while supply chain relief is gradually improving, qualifying for the domestic content adder credits remains a complex process. The establishment of domestic manufacturing capacity for crystalline silicon solar cells and other components is necessary before projects can qualify for the credit.

The report underscores the potential for continued growth in the US solar market, fueled by supportive policies and increasing demand for renewable energy sources.