Small-Scale Solar Continues Growth

A new report from the U.S. Energy Information Administration (EIA) estimates that the United States added 6.4 gigawatts (GW) of small-scale solar capacity in 2022, the most ever in a single year.

Small-scale solar (also called distributed solar or rooftop solar) refers to solar-power systems with one megawatt (MW) of capacity or less. Rooftop solar panels installed on homes make up the majority of small-scale solar capacity in the U.S. Small-scale solar power systems are also used in the commercial and industrial sectors.

According to the EIA report, U.S. small-scale solar capacity grew from 7.3 GW in 2014 (the year that EIA started publishing these estimates) to 39.5 GW in 2022,more than a five-fold increase. “Small-scale solar makes up about one-third of the total solar capacity in the United States,” said the EIA.

Reasons for the continuing growth of small-scale solar over the past decade include tax credits and incentives, public policy, higher retail electricity prices, and falling solar panel costs.

California has, by far, the largest share of the country’s small-scale solar capacity, at 36 percent, largely because of ample sunshine, favorable incentives, and relatively high retail electricity prices. In addition, the state’s Net Energy Metering Program allows rooftop solar panels to be connected to the power grid and provides credits for any surplus electricity produced by the panels and sent to the grid. Starting in 2020, the state also began requiring newly built single-family homes and multifamily buildings up to three stories high to have solar panels installed.

New York and New Jersey, despite being mid-Atlantic states with less year-round sunshine, have the second- and third-most small-scale solar capacity, respectively, although in recent years, sunny Texas and Arizona have been closing the gap. Long-standing state policies in New York and New Jersey offer generous solar incentives and have encouraged small-scale solar growth.

Furthermore, according to the EIA report, many of the states with the most small-scale solar capacity also have large populations. “Accounting for population size provides insight into how prevalent small-scale solar capacity really is in a state,” said the EIA.

“Although California has the most small-scale solar capacity, Hawaii has the highest small-scale solar penetration, at 541 watts per capita,” the report added. A large share of Hawaii’s electricity has historically come from oil-fired power plants. These plants rely on expensive fuel imports, resulting in high electricity bills. As solar panel costs have fallen, many homes and businesses in Hawaii have added solar panels, reducing their electricity bills and helping the state work toward its target to generate 100 percent of its electricity from renewable sources by 2045.


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