Dive brief:
- The 1.8 GW of U.S. residential solar installations in the third quarter set “another quarterly record” and marked a 12 percent increase over the same quarter last year, according to the latest US Solar Market Insight report released Thursday by Solar Energy Industries. Association and Wood Mackenzie.
- Developers installed just over 4GW of utility-scale solar, a 58% increase compared to the third quarter of 2022, “when supply chain constraints were severely suppressing installations , and flat compared to last quarter,” the report said.
- Meanwhile, commercial solar installations have slowed 3% from the same quarter last year and 6% from the previous quarter. “Slight slowdowns” in northeastern states have been “partially offset” by growth in California, but California solar growth is expected to slow in 2024, SEIA and Wood Mackenzie said.
Diving knowledge:
Solar developers installed a total of 6.5 GW of capacity in the US in the third quarter, a 35% increase over the same period last year and a record third quarter for the industry, according to SEIA and Wood Mackenzie. About 274 MW of community solar was installed in the third quarter, a 14% increase over the same quarter last year and flat compared to the previous quarter.
“We continue to see stagnation in some important markets as interconnection, permitting and location challenges persist,” the report said. “Community solar has healthy pipelines in most major markets, but interconnection and permitting timelines continue to hold back deployment.”
Overall, solar growth is expected to be further constrained from 2026 “as various challenges such as interconnection constraints become more acute,” said Michelle Davis, head of solar research at Wood Mackenzie and lead author of the report, in a statement. “It is critical that the industry continues to innovate to maximize the value that solar energy brings to an increasingly complex grid.”
Davis listed interconnection reforms, regulatory modernization and increasing storage connection rates as “key tools” to maximize the benefits of solar power.
SEIA President and CEO Abigail Ross Hopper agreed, saying solar is the fastest-growing energy resource in the U.S., but keeping up with the industry’s projected growth will require modernizing regulations and “[reducing] bureaucratic blockages”.
“High financing costs, transformer shortages and interconnection bottlenecks are also affecting the utility-scale segment, which recorded its lowest level of new contracts signed in a quarter since 2018 “, SEIA said in its statement. “However, improvements in the module supply chain have led to a record 12 GW of utility-scale deployment in the first 9 months of 2023.”
Solar module availability is “still limited, but has improved substantially this year. Of course, module availability will continue to improve as more domestic manufacturing comes online,” the report said.
However, as relief comes from module supply constraints, the report said the limited availability of other equipment has emerged as a pressing issue.
“Availability of transformers has become a widespread problem, with waiting times stretching over two years in some cases,” the report said. “Delivery times for high-voltage circuit breakers have almost doubled in the past year to an average of 100 weeks.”
These trends show no sign of reversing, SEIA and Wood Mackenzie say, and they expect the availability of electric equipment to be one of several factors holding back utility-scale solar growth in the near future.
The report also predicts that changes to clean energy metering policy in California, along with rising interest rates, will cause a “brief decline” in residential solar installations in 2024 before expect growth to pick up next year.
