Wood Mackenzie – US Solar Market Insight, 3Q 2023

In the second quarter of 2023, the US solar market experienced a 20% increase in installed capacity compared to the same period in 2022, reaching 5.6 GWdc. However, there was an 8% decrease from the previous quarter. Despite this, the industry is expected to reverse the contraction experienced in 2022, with nearly 12 GWdc installed in the first half of the year, indicating year-over-year growth. Solar accounted for 45% of all new electricity-generating capacity added to the US grid in the first half of 2023. The residential segment set a quarterly record with 1.8 GWdc of installations in Q2 2023, as anticipated due to California installations growing ahead of the net metering to net billing change in mid-April. This installation surge is expected to continue in the third quarter and taper off in the fourth quarter. The commercial solar segment installed 345 MWdc, which is a decline of 9% compared to Q2 2022 and 20% compared to Q1 2023. However, the number of projects installed increased by 7%, indicating relatively stable volumes for the segment. The community solar segment installed 226 MWdc, which is 16% less than in Q2 2022 and remained flat compared to the previous quarter. This stagnation in installation volumes is attributed to challenges related to interconnection, market penetration, and siting and permitting. The utility-scale segment installed 3.3 GWdc in Q2 2023, reflecting a 22% growth compared to Q2 2022, but a 14% decline from Q1 2023. Despite the decline in volumes from the previous quarter, the second quarter demonstrates momentum from supply chain relief, following a 66% year-over-year growth in Q1 2023. Developers have been adapting their equipment sourcing strategies to overcome challenges in getting equipment to project sites. With the implementation of the Investment Tax Credit (IRA) passed a year ago, the US is projected to significantly increase its total module manufacturing capacity from 10.6 GW to 108.5 GW by 2026, with approximately three dozen capacity additions announced by module manufacturers. Wood Mackenzie forecasts a 52% growth in the solar industry this year, installing nearly 32 GWdc of capacity, surpassing previous annual records. Modest growth is expected in the distributed solar segment, while the utility segment is set to almost double compared to last year. Over the next five years, an average annual growth rate of 15% is projected, driven by the long-term policy certainty provided by the IRA.