The Inflation Reduction Act (IRA) will help the US solar market grow 40%
The Inflation Reduction Act (IRA) will help the US solar market grow 40% over baseline projections through 2027, equal to 62 gigawatts (GW) of additional solar capacity, according to new forecasts in the U.S. Solar Market Insight Q3 2022report released by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, a Verisk business.
The utility-scale solar industry will grow substantially over the next 5 years, leading to new installations of 162GW. This growth in consumption will enable significant expansion in the Solar PV market from 129 GW.
The Solar Energy Industries Association president and CEO Abigail Ross Hopper said “This report provides an early look at how the Inflation Reduction Act is going to transform America’s energy economy, and the forecasts show a wave of clean energy and manufacturing investments that will uplift communities nationwide,” “With this incredible opportunity comes a responsibility to clearly address concerns over forced labor and ensure that we have ethical supply chains throughout the world.”
Despite positive projections for the next 5 years, 2022 solar installation forecasts are at 15.7 GW. the market’s lowest total since 2019, due primarily to a Commerce Department tariff investigation. In June, the White House put a halt on new solar tariffs and gave the solar market some much-needed relief. However, they failed to save the Uyghur Forced Labor Prevention Act and instead allowed detentions of solar modules to flourish which have caused even more damage to the market.
The U.S. Solar Market Insight Q3 2022report suggests that the UFLPA could throw a spanner in the works when it comes to solar deployment and limit this type of initiative up until 2023, which is delaying the near-term effects of the IRA.
Demand for rooftop solar has increased at the same time power outages are becoming more frequent and electricity prices keep on rising. The residential solar sector went crazy with 180k households installing solar in Q2. The Inflation Reduction Act with it’s solar subsidy is expected to drive an additional 7.3 GW of residential solar capacity over the next five years, and the new standalone storage tax credit will have a positive impact on grid reliability.
Even with supply chain issues slowing the market, solar accounted for 39% of all new electric generating capacity additions in the first couple of six months (2022) and now accounts for about 4.5% of national electricity use.