The US installed a record 22.5GW of grid-scale solar capacity in 2023, up 77% from the previous year, as fewer module supply chain constraints enabled completion of many projects that had been delayed, according to a new report by Solar Energy Industries Association (SEIA) and Wood Mackenzie.
Over 10GW of capacity came online in the fourth quarter, which exceeded the previous best for the period by more than 4GW.
Grid-scale is the largest US market segment and main industry driver followed by residential, 6.8GW installed last year; commercial (1.8GW), and community (1.1GW), noted the report, US solar Market Insight 2023.
Additions across the entire US market were 32.4GW, a 51% increase from 2022, and exceeding 30GW for the first time.
Module availability improved throughout 2023 as the industry imported record volumes, mainly from four nations in Southeast Asia: Cambodia, Malaysia, Thailand, and Vietnam.
Imports were at least three times US module manufacturing capacity, underscoring how dependent the industry here, particularly the grid-scale segment, is on Chinese-branded product.
The report estimates domestic plants can now supply 16.1GW, up from 8.5GW at the end of 2022, as companies take advantage of lucrative Inflation Reduction Act (IRA) federal tax credits to expand production.
“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% in 2023,” said SEIA CEO Abigail Ross Hopper.
President Joe Biden’s administration aims to create a US solar supply chain that is self-sufficient upstream with polysilicon and ingots, and downstream with wafers, cells, and panels- or at least free from Chinese influence. How long this could take is unclear.
The US currently does not have any ingot, wafer, or cell manufacturing facilities in operation, representing an opportunity for growth.
Record-low module prices
The report notes that record-low prices for modules and a tough economic environment could make it difficult for US manufacturers to follow through on announced facilities. In 2023, prices for monofacial and bifacial solar modules fell 26% and 31%, respectively.
PV shipments to the US exploded since President Joe Biden in June 2022 imposed a two-year moratorium on anti-circumvention and anti-dumping tariffs applied to crystalline-silicon cells and modules from those nations.
The waiver remains in effect despite a US Department of Commerce determination last year that four of eight leading Chinese PV producers were routing their supply chains through those nations to avoid tariffs on imports from China. Another 22 companies are under investigation.
Biden’s move was controversial as it has allowed Chinese-branded products to enter the US in violation of its trade rules and undercut his administration’s own probe into alleged circumvention before the Department of Commerce could issue a final report.
The waiver expires 6 June; companies have until December to install panels to avoid collection of duties as high as 254%.
The report noted that many developers are focusing on “materialising current pipeline with existing module stock before the end of the two-year tariff moratorium.”
While a more stable supply chain allowed the sector to regain momentum in project installations, high interest rates, tighter financing conditions, and interconnection uncertainty slowed contract negotiations last year.
In the fourth quarter, only 693MW of projects were contracted, a record-low quarter that resulted in the project pipeline falling to 83GW.
Looking ahead, Woodmac in its base case outlook forecasts that the grid-scale segment will add 148GW of capacity between this year and 2028, slightly less than 30GW/yr, and 343GW over the next decade.
The report forecasts that interest in the segment will remain strong throughout the forecast period as utility procurements, corporate clean energy goals, and state mandated targets continue to drive growth.
“A high case for US solar with increased supply chain stability, more tax credit financing, and lower interest rates would increase our outlook 17%,” said Michelle Davis, head of global solar at Wood Mackenzie and lead author of the report.
“A low case with supply chain constraints, less tax credit financing, and static interest rates would decrease our outlook 24%. Various policy and economic outcomes will have big implications for the US solar industry,” she added.
