The USA has quadrupled has expanded its capacity to produce solar modules within just a few years since the country passed the federal government's largest ever spending package on climate and clean energy.
According to a report released this week by Wood Mackenzie and the Solar Energy Industries Association, domestic solar module manufacturing capacity rose to 31.3 gigawatts in the second quarter of 2024. That's a significant jump, comparable to about 80 percent of the roughly 40 GW of solar power in the United States. installed last year.
This is welcome news as the U.S. seeks to meet goals set out in the Paris Agreement to prevent climate disasters such as wildfires and floods from getting significantly worse. The Biden administration has made domestic production a priority in the country's energy transition.
“The IRA incentives have really catalyzed this growth.”
“The incentives in the IRA have really catalyzed this growth [in manufacturing capacity],” said Michelle Davis, lead author of the report and global solar industry leader at Wood Mackenzie Power & Renewables, in an email to The edge.
Still, there are some dark clouds clouding the outlook for solar power in the U.S. While more solar panels are being manufactured in the U.S., the rate at which they are being installed has slowed recently. After years of growth, Wood Mackenzie expects the number of residential solar panels installed to decline 19 percent this year.
This is largely due to California's decision to reduce the rates that utilities pay to individuals who sell them excess electricity from new solar installations, according to the report. High financing rates and the bankruptcies of two major solar companies this summer have also likely taken their toll.
Installation of utility-scale solar power is also expected to decline by two percent this year, although this sector is doing better than private solar power. Projects have struggled to find enough workers and high-voltage equipment, the report says. Long waiting times for connection to the power grid are another problem. Total installations, including private solar power systems, are expected to decline by four percent this year.
For all these reasons, financial incentives like those in the IRA are critical as the U.S. seeks to build a domestic supply chain. Installations are expected to pick up again next year, growing 4 percent on average through 2029. Despite the challenges the industry faces, it still accounted for 67 percent of new generating capacity added to the grid in the first half of this year.