After President Joe Biden signed the biggest climate bill in American history into law, the market for solar energy in the United States is expected to almost treble over the following five years, according to a new analysis from the Solar Energy Industries Association and Wood Mackenzie.
In response to the favourable legislation, the research, which was released on Thursday, predicts that the U.S. market would expand by 40% more than previously anticipated through 2027.
The solar business now has the greatest degree of long-term confidence that it has ever had, according to Michelle Davis, principal analyst at Wood Mackenzie.
“Ten years of investment tax credits contrasts sharply with the industry’s recent experience of one-, two-, or five-year extensions. Saying that the IRA will usher in a new era for the U.S. solar sector is not an exaggeration, she continued.
According to the analysis, during the next five years, total solar installations across all market segments would increase from 129 gigawatts (GW) at present to 336 GW.
However, the survey stated that problems afflicting the industry, such as supply chain delays, will continue to restrain growth in the short term.
The sector installed 4.6 GW of new solar during the second quarter of 2022, up 12% from the first quarter but down 12% on an annual basis. Estimates currently stand at 15.7 GW added for the entire year, which would be the lowest annual total since 2019.
The Department of Commerce’s investigation of solar imports from Cambodia, Malaysia, Thailand, and Vietnam for anti-dumping and countervailing duties was cited in the report as the primary cause of the recent slowdown. The White House halted new solar tariffs in June for a period of two years, but the months of ambiguity caused developers to put off new solar installations as they awaited clarification on upcoming regulations.
The research stated that if not for supply chain issues and the industry-wide slowdown from March through June brought on by the start of the anticircumvention investigation, second quarter volumes across the solar industry “would have been higher.”
The most severely affected sector was utility-scale solar, with second-quarter installations declining by 25% year over year. Even still, the 2.7GW of added capacity represented a 17% increase from the first quarter. According to Wood Mackenzie, utility-scale solar will have its worst year since 2018 for the entire year.
One sector that saw increase in the second quarter was residential solar. The segment reached its fifth quarterly record with 1.36 GW deployed. This result amounts to nearly 180,000 additional clients and marks a 37% increase year over year.
The expansion coincides with an increase in grid failures. Due to record-breaking temperatures that have increased power demand, California has encouraged residents to reduce use. Climate change-related extreme weather has also caused problems for the grid. Consumers are turning to solar power as a result of increased electricity rates that follow rising commodity prices.