New solar installations set a record in 2023 with 32 gigawatts of new capacity
Energize Weekly, March 13, 2024
New solar installations – spurred by federal grants and tax credits – reached a record 32.4 gigawatts (GW) of capacity in 2023, a 51 percent increase year-over-year, according to a Solar Energy Industries Association-Wood Mackenzie market report.
It was the first time the U.S. installed more than 30 GW of capacity in a year. Solar made up 53 percent of all new electricity-generating capacity, also a record.
Solar module manufacturing also got a boost with capacity rising to 16.1 GW from 8.5 GW a year earlier.
“The Inflation Reduction Act is supercharging solar deployment and having a material impact on our economy, helping America’s solar module manufacturing base grow 89 percent in 2023,” Abigail Ross Hopper, CEO of the solar industry association, said in a statement.
“If we stay the course with our federal clean energy policies, total solar deployment will quadruple over the next ten years,” Hopper said.
All segments – residential, commercial, utility-scale, and community – posted increases in capacity in 2023. The market report projects an increase in all sectors, save residential, in 2024.
Changes in net metering – the credit given to homeowners for electricity put on the grid – to a new net billing policy in California is expected to lead to an overall decline of 13 percent for the sector next year.
In advance of those changes, there was a surge in residential installations in California leading to a record 6.8 GW of new capacity nationally, a 13 percent increase over 2022.
By the fourth quarter of 2023, however, installations were already down year-over-year. Excluding California, the residential segment was flat for the fourth quarter.
Texas bested California for the top spot for solar capacity installed in 2023. It is only the second time that Texas has outranked California for annual installations, which also happened in 2021. Texas capacity was driven by utility-scale installations, with nearly 4 GW of new capacity in the fourth quarter alone.
The utility-scale segment was responsible for the lion’s share of new capacity in 2023 with a record-setting 22.5 GW, including 10 GW installed in the fourth quarter for an annual growth rate of 77 percent.
“This growth underscores the market impact of supply chain constraints in 2022,” the report said. “Many of the projects completed in 2023 represent delayed buildout of 2022 pipelines.”
The commercial solar segment broke a six-year-old record with nearly 1.9 GW of new capacity in 2023, for a 22 percent increase from 2022 installations.
“Fourth quarter volumes in California doubled from their typical range as the commercial sector started to see the same surge of installations caused by the switch to net billing,” the report said.
Community solar, which for years has been the lagging segment of the solar market, was able to post a 3 percent annual increase, adding 1.15 GW.
“Despite year-over-year growth, obstacles persist in mature state markets,” the report said. “Installed capacity in Massachusetts, for example, declined 72 percent from 2022 as developers continue to wait on siting, permitting, and interconnection reform.”
There was also a slight decline in New York, the largest community solar market and the key driver for the segment, as permitting challenges and interconnection delays limited deployments. Still, New York accounted for 45 percent of total national installations.
The market analysis said it expects the national community solar market to grow by 7 percent annually on average through 2028.
For 2024, the report projects a 19 percent increase in commercial, a 15 percent increase in community, and a 26 percent rise in utility-scale capacity.
“There are healthy pipelines of late-stage and under-construction projects in each of these segments that will translate to installation growth,” the report said.
