US solar market expected to triple in size by 2028

From pv magazine USA

The US solar industry installed 6.1 GW of capacity in the first quarter of 2023, according to the US Solar Market Insight Q2 2023 report from the Solar Energy Industries Association (SEIA) and Wood Mackenzie.

Several factors contributed to the record first quarter, not the least of which was the surge in demand triggered by the Inflation Reduction Act (IRA) of 2022. But in addition to the surge, projects are beginning to move forward after being delayed due to supply chain challenges that began during the Covid-19 pandemic.

Wood Mackenzie forecasts that the solar market will triple in size over the next five years, amounting to a total installed solar capacity of 378 GW by 2028.

A key component to the IRA is the domestic content adder. In May, the US Department of the Treasury and Internal Revenue Service (IRS) released guidance that provides detailed information about the domestic content bonus under the Inflation Reduction Act. Solar power projects that use domestic content are eligible for the full 30% tax credit can increase their tax credit by an additional 10%, to 40% in total, and 0.3 ¢/kWh for projects that use the Production Tax Credit.

In addition to the tax credits for clean energy developers, the IRA provides incentives for the build out of US manufacturing, and it has effectively stimulated a number of companies to announce the intent to set up domestic manufacturing facilities. The SEIA/Wood Mackenzie report expects that, as a result of the surge in announced manufacturing facilities, domestic module capacity will 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 first quarter of 2023.

In addition to the domestic content adder, the IRA specifies adders for energy communities and low-income community projects, intending to drive investments 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, the president and CEO of SEIA. “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.”