he Solar Energy Industries Association (SEIA) and Wood Mackenzie have released their latest edition of the US Solar Market Insight Report, providing a snapshot of where solar energy in the US stands today. Let's jump into the highlights.
The US solar market is on an incredible roll, installing 6.5 GWdc of capacity in the third quarter of 2023 – that's a 35% jump from last year! This continued a trend of robust growth and record-setting quarters for the industry.
By accounting for nearly half (48%) of all new electricity-generating capacity in the US during the first nine months of 2023, solar power is clearly cementing its place as a key player in America's energy landscape.
Spotlight on Solar Segments
Residential Solar: The residential segment set a new quarterly record, with 1.8 GWdc installed, up 12% from last year. A significant part of this growth is driven by California, where solar installations surged due to sales made before the switch to net billing.
Commercial Solar: The commercial solar sector saw a slight dip from Q3 2022 but still managed to install 363 MWdc. Slowdowns in the Northeast were partially offset by growth in California and some emerging state markets.
Community Solar: Installation in this sector rose by 14% over the third quarter of 2022, reaching 274 MWdc. However, challenges in key markets remain due to issues with interconnection, permitting, and siting.
Utility-Scale Solar: This segment saw a notable 58% jump in growth from Q3 2022, adding over 4 GWdc. This robust performance is mainly due to easing supply chain bottlenecks.
Global solar module supply and demand imbalances have pushed down module prices globally, plummeting 30-40% from Q1 to Q3. However, with less than 0.1% of module imports from China, the US market remains somewhat insulated from these pricing shifts. Even so, the global trend has nudged US module prices down by about 10-15%.
Residential system cost has increased by 3%, while commercial pricing has seen a 2% drop. For utility-scale systems, pricing is up by 5-6%. This fluctuation is driven by a decline in module prices, and increased costs in labor, engineering, and equipment due to inflation.
Equipment Shortages: While module supply has improved, the solar industry is grappling with delays in securing crucial components such as transformers and high-voltage circuit breakers. In some instances, these delays are stretching beyond the two-year mark. Increased wait times are majorly disrupting project timelines in the short term, leading to a rush among developers to acquire the essential equipment.
Higher interest rates: The residential solar market is experiencing mixed dynamics. In regions such as California and several Northeast states, a surge in installations is fueled by policy shifts and rising retail rates. Contrastingly, in more price-sensitive areas like Texas, Arizona, and Florida, there's been a decline in sales volumes beginning in late 2022. This slump in sales subsequently started affecting installation rates in the first half of this year for Arizona and Texas, and in the third quarter for Florida.
The outlook for the US solar industry remains strong, with an expected average growth of 14% annually over the next five years. In 2023, the solar sector is expected to grow by 55% compared to 2022, with utility-scale projects driving much of this expansion. “With nearly 33 GWdc of capacity expected, it will be the nation’s largest year of solar installations by far,” – says the report.