Solar Growth Continues Unabated
According to a new report from Wood Mackenzie, solar energy continues its strong penetration into the world’s energy system, driven by strong policy support, attractive pricing, and the technology’s modular nature.
Wood Mackenzie expects over 320 GWdc of solar to be installed this year worldwide, which represents a 20 percent increase compared to its projections from last quarter.
Its latest global solar forecasts have global installations rising by an annual average of four percent over the next ten years.
The U.S. in specific is expected to see an impressive 52 percent yearly growth in solar installations in 2023 alone, reaching almost 32 GWdc of installed capacity by the end of the year, following a 13 percent market contraction in 2022. In specific, the organization expects a record 20 GWdc to be installed over the second half of the year, surpassing every annual total prior to 2021. “Modest growth is expected across distributed solar, while the utility segment is set to almost double compared to last year,” said the report.
Supply chain constraints are easing as more modules are making their way through ports. Furthermore, utility-scale solar developers in particular are rushing to install projects before the Federal government’s moratorium on new tariffs is lifted in June 2024.
Residential solar set a quarterly record in Q2, with 1.8 GWdc of capacity installed. A record 607 MWdc was installed in California ahead of the switch from net metering to the less favorable net billing regime. Despite quarterly records in ten states, high interest rates have slowed growth in larger markets, such as Arizona and Texas.
The report added that many countries are strategizing how to establish domestic solar technology supply chains. While the U.S. and the EU are seeking to minimize their dependence on China, manufacturing powerhouses like India and Mexico see the opportunity to meet growing domestic and international demand for solar technology components.
The U.S. is “leading the pack” in terms of solar manufacturing announcements. “If all of these were to materialize, solar manufacturing output in the country will grow by tenfold in just three years,” said the report.
However, challenges remain. For example, grid capacity bottlenecks are mounting across all regions. Record PV installation levels and limited interconnection capacity will continue to challenge project economics in the coming years.