The first full year under the Inflation Reduction Act was record-setting for the U.S. solar industry, which deployed 32.4 GW of capacity and grew its module manufacturing capacity from 8.5 GW to 16.1 GW in 2023, according to the latest U.S. Solar Market Insight report released today by the Solar Energy Industries Association and Wood Mackenzie.
Solar capacity installed last year was a 51% increase from 2022, and the first time that the industry exceeded 30 GW of installations in a single year, according to the report.
Solar also accounted for more than half of new generating capacity for the first time ever, contributing 53% in 2023. “This is the first time in 80 years that a renewable electricity source has accounted for over half of annual capacity additions to the grid,” SEIA said in a release.
SEIA president and CEO Abigail Ross Hopper credited the IRA in the release, saying that the legislation is “supercharging solar deployment and having a material impact on our economy.”
SEIA and Wood Mackenzie expect the industry’s momentum to continue throughout this year, “albeit at a lower growth rate since 2023 installations were record-shattering due to delayed 2022 projects coming to fruition in 2023.”
The report characterizes 2023 as a “year of recovery” for the industry after a 9% decrease in installations in 2022 as the industry faced trade restrictions on solar imports as well as supply chain instability.
SEIA and Wood Mackenzie’s report provides a “base case” outlook of likely outcomes, along with a pessimistic “bear case” and an optimistic “bull case”. The bear case outlook includes an increase in trade actions and other supply-limiting factors, but even so, “after a few years, supply constraints are mitigated by an acceleration of domestic manufacturing buildout, particularly for cells and wafers.”
In the base case outlook, SEIA and Wood Mackenzie expect U.S. installed solar capacity to quadruple by 2034 to 670 GW.
“While we expect about 38 GWdc of capacity installations in 2024, typical volumes will be in the 48-50 GWdc range from 2030 onward,” the report says. “This is a reduction from our expectations in our last Year in Review report. While solar has an incredibly strong outlook, interconnection challenges are the main driver of lower expectations in the latter half of our outlook.”
SEIA and Wood Mackenzie expect solar’s average growth of around 25% per year over the last decade will level off, with annual growth averaging 4% over the next ten years.
“The challenges that currently limit growth in this industry — particularly transmission and interconnection limitations — will only become more heightened over time,” the report says.
