Massive Growth in Solar Installations Powers Renewables Market

In 2023, the U.S. solar market installed 32.4 GWdc (gigawatts direct current) of capacity, a remarkable 51% increase from 2022. This was the industry’s biggest year by far, exceeding 30 GWdc of capacity for the first time. Solar accounted for 53% of all new electricity-generating capacity added to the U.S. grid in 2023, slightly ahead of the forecasted 52% of added capacity for 2023.

Residential solar grew 12% for the year: installations surged in California as customers rushed to take advantage of more favorable net metering rules that expired in April, 2023. This surge helped to offset declines in other states, believed to be mostly due to interest rate increases. California led the U.S. in solar, powering about 28% of its electrical needs with solar in 2023. Texas is running a strong second, powering about 20% with solar in 2023, adding almost 6.24 gigawatts of solar capacity for residential, business, and utility customers.

The changes in California net metering rules is expected to slow residential solar installations significantly for 2024, however the state’s utilities continue to offer rebates for installing battery capacity, and the Federal Tax Credit remains at 30% of the cost of installation until 2033. Purchasing an interest in an off-site community solar power (pdf) project also qualifies for the tax credit.

Commercial solar saw a similar increase in California, leading to national growth of 19% over 2022. Community solar grew just 3% compared to 2022. This segment continues to struggle with interconnection delays and permitting challenges, slowing year-over-year growth. As we reported last week, the Inflation Reduction Act (IRA) offers bonus tax credits for community solar development that serves low-income residents or is located in low-income areas, in addition to the 30 percent Investment Tax Credit available to all solar projects. Community solar has the potential to expand access to all, including customers who are unable to manage the up-front cost of solar installation, or those who rent a home or business office.

Finally, utility-scale installations spiked to 22.5 GWdc of capacity, a 77% increase over 2022.

Overall, photovoltaic (PV) solar accounted for 53% of all new electricity-generating capacity additions in 2023, making up more than half of new generating capacity for the first time.

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