- Wood Mackenzie and SEIA believe the US exited Q1/2024 with 11 GW new manufacturing capacity
- Utility-scale solar led new PV additions with 9.8 GW DC, but the distributed solar segment suffered a decline
- The year 2023 brought online more than 40 GW of new PV capacity, and a similar amount is expected for 2024 as well
- The impact of Section 301 and Section 201 tariffs is seen as insignificant, but AD/CVD tariffs may be a concern
The US solar PV market had a record Q1/2024 as it grew in both manufacturing capacity as well as installations, according to Wood Mackenzie and Solar Energy Industries Association’s (SEIA) US Solar Market Insight Q2 2024.
During the reporting quarter, it brought online 11 GW of new module manufacturing capacity, to a combined 26.6 GW. It increased from 15.6 GW at the end of Q4/2023. Analysts believe on full ramp-up, this capacity will be sufficient to supply about 70% of domestic demand. From June 2023 through March 2024, the US imported 49 GW of solar modules.
Now, the report says inventory levels are higher and module availability is a secondary concern compared to other constraints.
It does not see the increase from 25% to 50% in Section 301 tariffs on Chinese solar cells and modules and the elimination of exemption to bifacial solar modules under Section 201 as having any major impact on the US solar industry. There is ‘healthy module availability’ (see Bifacial Solar Panels Lose Section 201 Tariff Protection).
However, the analysts say they have not yet incorporated the impacts of potential new AD/CVD tariffs on Southeast Asian imports into the outlook for the US market. Their impact remains to be seen once there is clarity (see US Commerce Department Initiates AD/CVD Investigations).
Nevertheless, they believe there is sufficient manufacturing capacity outside of Southeast Asia to serve the US as Wood Mackenzie tracks more than 61 GW of operational cell manufacturing capacity by 2024-end in India, Indonesia, Laos, Mexico, Singapore and South Korea. This is over and above the 3.5 GW expected to come online in the US.
NEW INSTALLATIONS
In terms of new installations, the US grew by 11.8 GW DC during Q1/2024, a record 1st quarter for the industry and its 2nd largest quarter of installations in history, right behind Q4/2023.
Solar energy was also responsible for 75% of all new electricity-generating capacity added to the US grid in the reporting quarter. At the end of March 2024, the cumulative installed solar PV capacity of the US increased to 200 GW. This includes more than 40 GW installed in 2023, a number that the analysts project for this year as well.
The installation spree was driven by the utility-scale segment that contributed 9.8 GW DC, making Q1/2024 the largest 1st quarter ever for this segment. Florida, Texas, California and Nevada were the top markets.
Distributed solar didn’t fare all that well. The residential segment shrank by 25% year-over-year (YoY) and 18% quarter-over-quarter (QoQ) with 1.3 GW DC, owing to high interest rates and the transition to net billing in California.
The commercial solar segment installed 434 MW DC, representing a 38% sequential drop as developers face ‘frustrating challenges’ with interconnection timelines, high development costs and growing market saturation.
Community solar didn’t fare any better as it added 279 MW DC with a 32% sequential drop. The report writers believe this segment needs enabling policy to expand into new state markets.
FORECAST
The report forecasts the US solar industry to consistently install around 40 GW DC annually for the next 5 years. In 2024 and 2025, analysts anticipate the growth to be flat, driven by a slowdown in growth in the utility-scale segment.
Other barriers the market faces include the lack of labor, high voltage equipment constraints, and continued trade policy uncertainty. It will lead to average single-digit annual growth from 2026-2029.
The complete report can be purchased from Wood Mackenzie’s website for $7,500.
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