By Mark Jaffe, EUCI energy writer
A record-setting 8.6 gigawatts (GW) of solar capacity was installed in the third quarter of 2024 – a 21% year-over-year increase – but a combination of manufacturing constraints and uncertainty about Trump administration energy policy may cool growth, according to an industry market report.
Total solar deployment in 2024 is expected to exceed 40 GW, led by utility-scale and commercial installations, said the report by the Solar Energy Industries Association (SEIA) and consultant Wood Mackenzie.
Solar made up 64% of all new electricity-generating capacity added to the U.S. grid in the first three quarters of 2024. Solar now produces enough electricity annually in the U.S. to power more than 37 million homes.
Through the first three quarters of 2024, Texas led in installations with 7.8 GW of capacity, followed by Florida with 3.1 GW and California with 2.7 GW.
Supply constraints and potential changes in federal tax and funding supporting solar may limit solar growth going forward, the report said.
“Our current outlook for the next five years has the U.S. solar industry growing 2% per year on average, reaching a cumulative total of nearly 450 GW by the end of 2029,” Michelle Davis, Wood Mackenzie head of solar research, said in a statement.
The market report projects average annual installations of at least 43 GW from 2025 to 2029, with a 26% decline in residential arrays.
“Demand for solar remains robust, and annual installation forecasts would be higher if not for limitations the industry faces, including those related to interconnection, labor availability, supply constraints, and policy,” Davis said.
The report said it is “too early to predict the nature and degree of potential policy changes resulting from a new federal government.” As a result of the “level of uncertainty,” forecasts were being made based on the current policy status quo.
In the last two years, 1.4 million American households have used federal incentives to install solar and lower their energy costs.
Still, in the third quarter, the residential sector saw a drop in installations, a trend which began in 2023. A total of 1.1 GW was installed in the quarter, a 4% quarter-over-quarter drop and a 39% decrease compared to the third quarter of 2023.
“Unlike in prior quarters, however, the dip was not driven by California, which experienced a 7% quarter-over-quarter increase,” the report said. “Volumes in most states across the country continued to decline as elevated interest rates and customer uncertainty dampened demand.”
SEIA-Wood Mackenzie is now projecting a 26% reduction in the residential sector in 2024 compared to 2023.
The community solar segment also saw a drop of 17% quarter-over-quarter and 12% year-over-year with 291 MW installed in the third quarter. Maine and Illinois saw quarterly growth in community solar, but that was offset by a weakening market in New York.
In contrast to the residential and community sectors, commercial and utility-scale installations saw strong growth.
In the third quarter, 535 MW of commercial solar was installed, 44% more than the same quarter in 2023. Projects in California, Illinois, Maine and New York finally came online at the end of the year.
A total of 6.6 GW of utility-scale solar was installed in the third quarter, a 44% increase year-over-year. “This was the highest third quarter on record for the utility-scale solar industry as developers continue building out a strong pipeline of projects,” the report said.
Domestic module manufacturing capacity continued to increase in the third quarter, with more than 9 GW of capacity added, bringing total manufacturing capacity to 40 GW.
In mid-2022, just before the federal domestic manufacturing and procurement tax credits went into effect, U.S. module manufacturing capacity was just 7 GW. The third quarter of 2023 also saw the opening of the first U.S. cell manufacturing facility, reshoring cell manufacturing in for the first time since 2019.
“The United States is stepping up to take market share from foreign competitors and making sure that the jobs and economic growth from solar are benefiting American communities,” Abigail Ross Hopper, SEIA president and CEO, said in a statement.
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