Skip to main content

U.S Solar Market Registers Best First Quarter in Industry History as Supply Chains Stabilize and Inflation Reduction Act Takes Hold

As a result of record quarter, solar market on track to triple in size by 2028

Thursday, Jun 08 2023

Share
Press Release

WASHINGTON D.C. — The U.S. solar industry installed 6.1 gigawatts (GW) of solar capacity and had its best first quarter in history, according to the US Solar Market Insight Q2 2023 report released today by the Solar Energy Industries Association (SEIA) and Wood Mackenzie. The record quarter was driven in large part by supply chain challenges abating and delayed solar projects moving forward.  

Due in part to the strong first quarter numbers and a surge in demand from the Inflation Reduction Act (IRA), Wood Mackenzie expects the solar market to triple in size over the next five years, bringing total installed solar capacity to 378 GW by 2028.  

The IRA has also spurred a surge of new manufacturing announcements, with domestic module capacity expected to rise from fewer than 9 GW today to more than 60 GW by 2026. At least 16 GW of module manufacturing facilities are under construction as of the end of Q1 2023.

This quarter, the Biden administration provided some clarity on how the landmark law’s adder credits will be applied. The law contains new credits that can be used in conjunction with the solar Investment Tax Credit, like the domestic content, energy communities, and low-income adder credits. In particular, the energy communities and low-income adder guidance will help drive solar and storage investment in underserved communities.  

“As the Inflation Reduction Act begins to flex its muscle and drive demand, the U.S. solar and storage industry is eagerly awaiting further guidance on some of the most impactful pieces of the law,” said Abigail Ross Hopper, SEIA president and CEO. “Timely, specific, and workable implementation guidance from the administration will have a major impact on our success in both the near and long-term. This guidance is powerful, and if done correctly, it could unlock new market potential across the country.”

While the IRA has already catalyzed major investments in solar manufacturing and deployment, challenges remain with the implementation guidance for the domestic content adder credits in the near-term.  

Because the rules to comply with the domestic content adder credit are complex and there is currently no crystalline silicon solar cell manufacturing capacity in the United States, it could take a few years before the credit can be widely used. The rules also fail to provide specific directions for the residential market, leaving this market segment without clarity.

“The US 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, qualifying for the domestic content adder will be a very complex process for solar project developers. Even once crystalline silicon cell manufacturing is established, many other components will need to be produced domestically before projects can qualify.”

The utility-scale market rebounded from a difficult 2022 with a strong first quarter and a record 3.8 GW of installed solar capacity. This quarter, more module importers were able to satisfy the documentation requirements under the Uyghur Forced Labor Prevention Act (UFLPA). This enabled more solar equipment to make it to project sites and allowed the industry to build out its long pipeline of delayed projects.

Despite rising interest rates and economic headwinds causing customer hesitancy, the residential segment installed 1.6 GW of solar capacity in Q1 2023, a 30% increase from Q1 last year. The residential market segment is on track to add 36 GW of solar over the next five years, growing at an average annual rate of 6%.  

The commercial market also had a record first quarter, with 391 MW installed, putting the segment on track for 12% growth in 2023. Meanwhile, the community solar segment installed 212 MW, a 13% decrease from Q1 2022 due in large part to ongoing interconnection challenges.  

By far, Florida was the top solar state in Q1 2023 thanks to 1.46 GW of utility-scale solar installations. Florida installed over 70% more solar capacity in Q1 than the next highest state, California.  

Due in part to those installations, the solar industry accounted for 54% of all new electricity-generating capacity added to the grid in Q1.

Learn more at seia.org/smi.

###

About SEIA®: 

The Solar Energy Industries Association® (SEIA) is leading the transformation to a clean energy economy, creating the framework for solar to achieve 30% of U.S. electricity generation by 2030. SEIA works with its 1,000 member companies and other strategic partners to fight for policies that create jobs in every community and shape fair market rules that promote competition and the growth of reliable, low-cost solar power. Founded in 1974, SEIA is the national trade association for the solar and solar + storage industries, building a comprehensive vision for the Solar+ Decade through research, education and advocacy. Visit SEIA online at www.seia.org and follow @SEIA on Twitter, LinkedIn and Instagram

Media Contact: 

Jen Bristol, SEIA's Senior Director of Communications, [email protected] (202) 556-2886

Related News

Wednesday, Mar 06, 2024

Solar Installations Skyrocket in 2023 in Record-Setting First Full Year of Inflation Reduction Act

WASHINGTON, D.C. — The U.S. solar industry added a record-shattering 32.4 gigawatts (GW) of new electric generating capacity in 2023, a 37% increase from the previous record set in 2021 and a 51% increase from 2022. According to the U.S. Solar Market Insight 2023 Year-in-Review released today by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, solar accounts for 53% of all new electric generating capacity added to the grid last year.

Read More
Thursday, Dec 07, 2023

Solar Poised for Record-Setting 2023 while Economic Challenges Mount

The U.S. solar industry added 6.5 gigawatts (GW) of new electric generating capacity in Q3 2023, a 35% year-over-year increase as federal clean energy policies begin to take hold. As a result of this growth, the United States is expected add a record 33 gigawatts (GW) of solar capacity in 2023, according to the U.S. Solar Market Insight Q4 2023 report released today by the Solar Energy Industries Association (SEIA) and Wood Mackenzie.

Read More
Thursday, Sep 07, 2023

Solar Installations in 2023 Expected to Exceed 30 GW for the First Time in History

WASHINGTON D.C. — The U.S. solar industry expects to add a record 32 gigawatts (GW) of new capacity in 2023, a 52% increase from 2022, according to the U.S. Solar Market Insight Q3 2023 report released today by the Solar Energy Industries Association (SEIA) and Wood Mackenzie.

Read More