The United States solar industry can proudly say that it has yet broken another record. For the first time, solar power production accounted for more than 50 percent of all new electricity, one of the key achievements of 2023, according to the Solar Energy Industries Association. Increase production across all sectors helped make this record possible with numbers including 77%, 19%, and 12% improvements in utility, commercial, and residential, respectively. 2023 was the first year that American solar workers installed more than 30 Gigawatts of solar capacity finishing up at 32 GW.
A notable part of this story is the fact that Texas, for only the second time, installed more solar than California in a year. This was largely due to large utility scale projects in which the state installed 4 Gigawatts in the last quarter of 2023 alone. Texas ended the year with a total of 6.5 GW of installed solar capacity. Correspondingly, coal production fell to below 10 percent and was surpassed by solar.
However, the residential solar industry is expecting to contract slightly by the end of 2024, largely due to recent changes in California’s net metering policies. The new NEM 3.0, or Net Billing, drastically reduces what utilities in the state will offer for electricity that solar power owners send to the grid. Under previous net metering programs, homeowners would receive full retail rates as compensation for their excess power production. The new Net Billing program basically offers the “avoided cost rate”, which is approximately 70 percent less than what was offered before. In fact, the SEIA is expecting a 13 percent reduction in residential solar business for 2024 compared the previous year.
On a more positive note, the industry is forecasting a quick rebound. Taking the SEIA’s base case predictions (right in between bear and bull case), 2025 will see the residential sector grow by 13 percent, erasing the same amount that it is expected to decline by the end of this year. Steady growth is expected the following years with an average of about 5 percent per year through 2034, adding more than 100 Gigawatts of power. This positive forecast assumes improvements in supply chains, interconnection capabilities, and lower interest rates, to name some of the primary factors.
All in all, this recent market report from the SEIA shows the resilient nature of the solar power industry. While there can be industry “hiccups” along the way, the trend line remains the same for solar, it will remain upward bound.
