US Solar Industry Marks Record Growth in Q3 2023, Sets Sights on Stellar Year Ahead

US solar Capacity additions in 2023

The US solar industry has soared to unprecedented heights, installing a remarkable 6.5 gigawatts-direct current (GWdc) of capacity in the third quarter of 2023. This staggering figure not only reflects a 35 percent surge from the same period in 2022 but also signifies a 1 percent uptick from the previous quarter, solidifying this quarter as a historical high for the industry.

The industry’s bullish momentum, as detailed in the latest US Solar Market Insight Q4 2023 report, co-developed with the Solar Energy Industries Association (SEIA), forecasts a colossal 55 percent surge in capacity installations this year compared to 2022. This remarkable surge is largely propelled by a resurgent demand in utility-scale volumes, indicating a significant recovery for this sector after facing challenges in 2022, consultancy firm Wood Mackenzie said in its report.

Insight Highlights:

Recovery of Utility-Scale Solar Industry: The utility-scale solar segment has rebounded emphatically, tallying an impressive installation of 12 GWdc thus far, mirroring last year’s total utility-scale installations. Noteworthy enhancements in supplier diversification and the release of module detentions have fueled substantial increases in solar module imports, rejuvenating the sector significantly.

Supply Dynamics and Pricing: While global solar module supply constraints have eased, discrepancies persist in the availability of other critical electrical equipment in the US. These imbalances have exerted downward pressure on module pricing globally, with a substantial 30-40 percent decrease in average global pricing. However, the US faces unique challenges due to disparities in module supply dynamics, leading to higher module pricing despite a decrease of 10-15 percent over recent months.

Residential Solar Markets Divergence: The residential solar market has exhibited robust growth, particularly in states like California and certain Northeast regions, witnessing record-setting quarterly installations. Factors like net billing changes in California and rate hikes in the Northeast have spurred installation surges. Nevertheless, a contrasting trend emerges in price-sensitive markets like Texas, Arizona, and Florida, where rising interest rates have led to declining sales volumes and subsequent impacts on installations.

Future Outlook: Forecasts indicate a monumental year for the US solar industry, with an anticipated installation of nearly 33 GWdc, a zenith in the nation’s solar journey. However, the long-term growth trajectory, while strong with an average annual growth of 14 percent over the next five years, could face challenges stemming from interconnection bottlenecks and transmission capacity limitations.