I recently wrote an article titled “Inflation Reduction Act To Give U.S. Solar Energy Industry A Much Needed Boost.” A few days later, the U.S. Solar Energy Industries Association (SEIA) published a press release that said pretty much the same thing. The title: “U.S. Solar Market Ready for Rebound After Tumultuous First Half of 2022.”
The IRA to the Rescue
SEIA notes the unfortunate reality of a market slowdown in Q2 2022 (not the direction you want to go in), but optimistically forecasts a boost in growth from both the Inflation Reduction Act of 2022 (IRA) and a pause on solar tariffs. “The Inflation Reduction Act (IRA) will help the U.S. 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 2022 report released today by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, a Verisk business,” SEIA wrote yesterday.
“According to Wood Mackenzie, the utility-scale sector will lead the solar industry’s growth over the next five years with 162 GW of new capacity. Cumulative solar installations across all market segments will nearly triple in size, growing from 129 GW today to 336 GW by 2027.”
“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,” said SEIA president and CEO Abigail Ross Hopper. “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.”
“The Inflation Reduction Act has given the solar industry the most long-term certainty it has ever had,” said Michelle Davis, principal analyst at Wood Mackenzie and lead author of the report. “Ten years of investment tax credits stands in stark contrast to the one-, two-, or five-year extensions that the industry has experienced in the last decade. It’s not an overstatement to say that the IRA will lead to a new era for the U.S. solar industry.”
Some Struggles Remain for U.S. Solar Industry
That’s not to say all is peaches and cream. As I wrote in that article at the top, the U.S. solar energy industry has taken a big hit this year. The “always upward” growth chart for the industry got disrupted. SEIA acknowledges that as great as the IRA is, the 2022 forecast is still down in the dumps. SEIA has dropped this year’s forecast to just 15.7 GW of new solar power capacity. That would make it the lowest total for a single year since 2019.
While the Biden–Harris administration has worked to pause tariffs on Chinese solar panels and open up trade more again, new legislation was passed right afterward closing the doors. “In June, the White House paused new solar tariffs for two years, providing some relief to the market. However, the Uyghur Forced Labor Prevention Act (UFLPA) went into effect on June 21 and has resulted in detentions of solar modules, exacerbating ongoing supply chain challenges.” There’s plenty to discuss on this topic, but we’ll have to spend a whole other piece on that.
Rooftop Solar is Soaring
The Q1 residential solar power trends that I wrote about a few days ago continued in Q2. While other segments of the industry have dropped a bit, residential rooftop solar has kept soaring. “Demand for rooftop solar is at historic highs in the face of power outages and increasing electricity prices. The residential solar segment set a record for the fifth consecutive quarter with nearly 180,000 American households installing solar in Q2. The IRA will drive an additional 7.3 GW of residential solar capacity over the next five years, and the new standalone storage tax credit across all market segments is expected to improve grid reliability.”
The future looks bright. Stay tuned!
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