In the U.S., according to a recent report, the solar market is rebounding after struggling in the first 6 months of 2022. This rebound was due to the passage of the Inflation Reduction Act (IRA). This legislation is expected to allow the solar market to grow by some 40% over baseline projections through 2027. This increase corresponds to 62 GW of capacity.
Michelle Davis, an analyst with Wood Mackenzie, explains:
“The Inflation Reduction Act has given the solar sector the most long-term certainty it has ever had. Ten years of investment tax credits stands in stark contrast to the one-, two-, and five-year extensions the industry has experienced over the past decade. It’s no exaggeration to say that the IRA will lead to a new era for the U.S. solar industry.”
The solar market is picking up in the United States
According to Wood Mackenzie, the U.S. solar market will be driven primarily by utilities for the next 5 years. They would then have to deploy 162 GW of new capacity. When all solar installations are aggregated, the U.S. solar market is expected to triple to 336 GW by 2027.
Abigail Ross Hopper, CEO of the Solar Energy Industries Association (SEIA), comments on the report:
“This report provides the first glimpse of how the Inflation Reduction Act will transform the U.S. energy economy, and the forecast shows a wave of investment in clean energy and manufacturing that will lift communities across the country. With this incredible opportunity comes the responsibility to clearly address concerns about forced labor and ensure we have ethical supply chains around the world.”
While the solar market is rebounding, the forecast for 2022 is not as good as hoped. These have fallen by 15.7 GW. In fact, this is the lowest market total since 2019. TheCommerce Department’s survey was the main reason for the decline.
In addition, the Uyghur Forced Labor Prevention Act (UFLPA) leads to the detention of solar modules. For example, the solar market is still struggling in the United States. According to the report, the UFLPA will limit solar deployment through 2023.
However, the solar market is driven by soaring electricity prices and power outages. For example, demand for rooftop solar panels is exploding in the United States. The installations are multiplying. During the 2nd quarter, 180,000 American households installed solar panels.
This market should continue to thrive. In fact, the IRA is expected to be a major driver for the development of residential solar capacity in the United States. An increase of 7.3 GW is expected over the next 5 years.
Despite the challenges, solar accounted for 39% of new power generation capacity in the first half of the year. In the United States, the solar market represents 4.5% of the energy mix.
