The US solar market is expected to triple by 2028

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According to the US Solar Market Insight Q2 2023 report, the US solar industry had its best first quarter on record as supply chain challenges began to fade.

The US solar industry installed 6.1 GW of capacity in the first quarter of 2023, according to the US Solar Market Insight Q2 2023 report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie.

The record first quarter was driven by several factors, not the least of which was the increase in demand triggered by the 2022 Inflation Reduction Act (IRA). But beyond the uptick, projects are starting to move forward after supply delays. The chain challenges that started during the Covid-19 pandemic.

Wood Mackenzie predicts the solar market will triple over the next five years, with total solar capacity reaching 378 GW by 2028.

The central part of the IRA is the domestic addition of content. In May, the US Department of the Treasury and the IRS published guidance that contains detailed information on the domestic content bonus under the Inflation Reduction Act. Solar projects using domestic content are eligible for the full 30% tax credit, can increase the tax credit by another 10% to a total of 40% and 0.3ยข/kWh for projects using the production tax credit.

In addition to tax credits for clean energy developers, the IRA provides incentives to build U.S. manufacturing and has effectively encouraged several companies to announce their intentions to establish domestic production facilities. The SEIA/Wood Mackenzie report expects domestic module capacity to rise from less than 9 GW today to more than 60 GW by 2026 as a result of the increase in reported production facilities. At least 16 GW module production plants are under construction. at the end of the first quarter of 2023.

In addition to the domestic content increase, the IRA defines additional equipment for energy communities and low-income community projects, which are intended to direct investments to underserved communities.

“As the Anti-Inflation Act begins to flex its muscles and boost demand, the U.S. solar and storage industries are eagerly awaiting further guidance on some of the most impactful sections of the Act.” said Abigail Ross Hopper, CEO of SEIA. “Management with timely, accurate and effective implementation control has a great impact on our success in both the short and long term.. This guidance is effective and, if done correctly, can open up new market potential throughout the country.”

The Q2 Solar Market Insight report paints a picture of an upward trend, but the growth is not without complications. First, the maze of IRA credits remains complex and challenging. And second, it may be a few years before a full range of US-made solar cell materials and components is available. The report suggests that there is currently no manufacturing of crystalline silicon cells in the United States, although a few manufacturers have announced plans to do so, but it will be some time before the facilities are up and running.

Michael Parr, executive director of the Washington, DC-based Ultra-Low Carbon Solar Alliance, says manufacturing polysilicon, wafers and cells is capital-intensive, which is why we’re initially seeing so many announcements for module manufacturing instead. Any mismatch between US module and cell production capacity would result in module manufacturers remaining dependent on imported cells for the foreseeable future.

“The U.S. solar industry is slowly starting to see supply chain relief,” said Michelle Davis, head of global solar at Wood Mackenzie and lead author of the report. “At the same time, getting to domestic content addition will be a very complicated process for solar project developers. Although the manufacturing of crystalline silicon cells has started, many other components must be produced domestically before the projects can be approved.”

The SEIA/Wood Mackenzie report also notes that IRA rules leave the housing market unclear by not specifying how additions and credits can be applied. However, the housing market grew by 30% from the corresponding quarter last year. The report estimates that the residential segment installed 1.6 GW of solar in the first quarter of 2023 and will add 36 GW of solar over the next five years, growing at an average annual rate of 6%.

Looking at the electricity scale market, it recovered from a difficult year in 2022 and installed a record 3.8 GW of capacity. The report points to delayed projects due to the challenges of a fading supply chain as more module importers were able to meet documentation requirements under the Uyghur Forced Labor Prevention Act (UFLPA).

The commercial market installed a record 391 MW, with growth of 12% in 2023. The only market downturn noted in the report is community solar, which fell 13% and is installing just 212 MW, largely due to interconnection backlog.

Overall, the solar industry accounted for 54 percent of all new power generation capacity added to the grid in the first quarter of 2023.

David
Davidhttp://solarpanelnews.com
David is a passionate writer and researcher who specializes in solar energy. He has a strong background in engineering and environmental science, which gives him a deep understanding of the science behind solar power and its benefits. David writes about the latest developments in solar technology and provides practical advice for homeowners and businesses who are interested in switching to solar.

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