Dive Brief:

• U.S. solar installations are booming, with nearly 32 GW of capacity expected to come online this year even as supply chain and other challenges persist, according to the latest U.S. Solar Market Insight report released Thursday by the Solar Energy Industries Association and Wood Mackenzie.
• The industry is racing to build out a domestic supply chain before new tariffs are applied to solar cell and module imports from Southeast Asia beginning in 2024, but SEIA still expects installed gigawatts-direct current to nearly triple in the next five years.
• “Even with the current challenges facing this market, the solar industry is looking at many years of sustained, strong growth,” the report said.

Dive Insight:

A 2023 solar bounceback had been anticipated by SEIA and Wood Mackenzie after only 20.2 GW of solar capacity was installed in 2022, a 16% decline from the previous year — but their forecast in a March report only projected 28.4 GW in installations, “assuming no further disruptions.”

“We increased our outlook for utility-scale in the near-term, but lowered our expectations slightly in the later years,” the report said. “There is a cumulative total of 153 gigawatts direct current of solar capacity installed through the first half of 2023, and we expect this figure to grow to 375 GWdc by the end of 2028.”

A release from SEIA and Wood Mackenzie credited the Inflation Reduction Act with making this growth possible despite the headwinds the industry has faced as a result of global supply chain disruptions during the pandemic, the Department of Commerce’s tariff circumvention investigation, and shipments being held at the border after the passage of the Uyghur Forced Labor Prevention Act.

“The IRA has undoubtedly caused a wave of optimism across the solar industry. Announcements for domestic module manufacturing have exploded, promising more stable solar module supply in the future,” said Michelle Davis, head of global solar at Wood Mackenzie. 

Earlier this year, solar manufacturers First Solar and Hanwha Qcells announced several billion dollars of investments in new U.S. manufacturing facilities, and in August, community solar provider Nexamp announced that it had agreed to purchase 1.5 GW of modules produced domestically by solar module manufacturer Heliene. 

“Heliene expanded its facility in November 2022 and has additional expansions planned for September to increase manufacturing capacity of domestic solar modules, which was made possible by the Inflation Reduction Act,” Nexamp said in a release.

SEIA and Wood Mackenzie’s latest report said that it is “clear from installation volumes and solar equipment imports through the first half of this year that developers are adapting their supply chains.”

Nevertheless, market volatility is expected to persist through 2024, with supply chain difficulties continuing to pose problems and raise prices, the prior edition of the report said.

Commerce’s finding that four Southeast Asian countries circumvented tariffs on Chinese-made components, and its decision to impose import duties on panels from those countries, is expected to throttle supply once the two-year moratorium on new duties is lifted. 

Asim Hafeez, owner and president of Empower Energy Solutions, said the decision is likely to hurt solar adoption in the short term by increasing the cost of solar installations.

“In the next few years, it's going to put extra pressure on pricing, which is going to create extra financial pressure for the consumer,” he said.