Solar Power Statistics in America in 2021 0

It’s important for solar installers to understand critical information regarding solar power. The SEIA (Solar Energy Industries Association) and Wood Mackenzie release their Solar Market Insight reports each year to help people focus on such aspects.

The United States solar market has exceeded the 100 GWdc (gigawatts) of installed electricity capacity because it obtained double the capacity size for electricity generation within the last 3.5 years.

In the first quarter for 2021, the solar market within the US installed over 5 GWdc of solar capacity. This was a significant increase over the first 2020 quarter of 46 percent and is also the largest on record.

We’re here to share with you the analysis and data to better understand what’s happening in the United States. You can skip to specific information or read the full report! Let’s get started.

(sourced from Unsplash.com)

The US Solar Energy Market for 2021

The solar market within the US managed to set another record in 2021. This is on top of the many challenges and global issues surrounding the financial markets, supply chains, and public health concerns all countries dealt with.

In fact, the United States segments its solar energy market into three sectors: utility, non-residential, and residential PV. Let’s look at them now.

Commercial PV

The commercial PV industry installed about 327 MWdc in the third quarter of 2021, which was lower than the prior two quarters. In fact, the Q2 results showed that certain solar markets experienced significant delays in the solar projects because of supply chain issues, which will push the energy capacity into 2022.

Overall, the Q3 results indicate that those project delays were more widespread than originally forecasted. While there were delays for solar equipment and major changes had to be made to orders to redesign particular projects, experts believe that 2022 through 2023 should see a higher solar market growth than 2021.

The solar power market outlook for New Jersey and Illinois saw big improvements. This has resulted in an overall better forecast for annual capacity for 2023 and 2024. Likewise, Illinois was able to pass its qualifications for the Energy Transition Act, regaining some of its critical programs for solar distribution.

Most of the Transition Incentive projects should increase Illinois’ solar energy capacity within the next few years. Specifically, there has been over 700 MWdc worth of applications, which were submitted from June through September.

The Commercial PV Forecast for Installations in the US Solar Market Segment

(sourced from SEIA)

Residential PV

In 2021, installers for the residential solar energy market converted a higher consumer demand for electricity into more installations and sales. According to them, supply chain issues were a huge concern for project timelines, causing significant solar equipment and component prices. 

The supply chain problems affected the solar market’s overall growth, but labor and permitting constraints didn’t help. Based on the forecasts from Wood Mackenzie in 2020, there should have been a 12 percent growth within the residential segment for 2021. However, this assumed that bottlenecks didn’t worsen drastically.

In the third quarter of 2021, solar installers installed about 1,073 MWdc (megawatts), which set a new record in quarterly installations and exceeded the 1 GWdc amount that was installed in one quarter.

There were over 130,000 systems made in one quarter, and roughly one out of 600 home owners in the United States installed solar power systems per quarter. Wood Mackenzie had estimated there will be 5.8 GWdc for additional residential capacity from 2022 to 2026. It projected that the market should grow at an average of 11.5 percent annually during that time.

California is currently the leading state with record-breaking quarters for the residential market segment and had 373 MWdc. However, Texas and Florida are in the third and second spots for energy growth.

The Residential PV Forecast for Installations in the US Solar Market Segment

(sourced from SEIA)

Utility PV

There have been many challenges coming from supply chains and the higher cost of solar energy equipment. Therefore, the utility sector received its first big capacity during 2021’s third quarter when it installed 3.8 GWdc. In the third quarter, it registered and signed new contracts for 6.1 GWdc, which pushed the pipeline up to 81 GWdc. 

Likewise, many solar projects were under construction at the time, with 22.3 and 7.5 GWdc, bringing the total amount for 2021 to 20.2 GWdc. In fact, this has been the most significant growth in one year for this industry.

Before those numbers, it had surpassed significant turmoil relating to high solar equipment pricing and supply chain constraints. It’s believed that those current challenges in the solar industry will still strike market growth for 2022 and into 2023, which adds to the overall complexity developers experience when procuring and negotiating strategies in 2022.

The challenges the market faces could result in a 33 percent decrease from the current forecast, which means 7.5 GWdc. Likewise, other constraints, including interconnection limitations, labor shortages, tax equity availability, and sitting restrictions, will all add up to the issues the utility sector faces in the coming months and years.

Regardless, the utility PV sector should continue growing in larger numbers under its current policy environment. The ITC extension comes with the option for solar installers to maximize the PTC (Production Tax Credit) and receive direct payment for the ITC. This might add an upside to the forecast, which may increase solar capacity by upwards of 36 GWdc by 2026.

The Utility PV Forecast for Installations in the US Solar Market Segment

(sourced from SEIA)

Community Solar

Though the commercial and residential sectors of the PV market saw increases, the same can’t be said for the community solar energy market. These installations for the third quarter of 2021 significantly dropped by 21 percent for each quarter. 

Most major solar markets for the segment face delays because of interconnection problems, components delivery, and supply constraints. Fortunately, it has steadily improved over the years, so it remains on track based on the data provided to see a record-breaking year.

Massachusetts and Maine forecasts have now been adjusted down from the last quarter. Completion dates for Maine’s transmission studies experienced a several-month delay. 

However, ongoing cluster studies indicate that Massachusetts is having issues because of the prohibitive upgrade costs relating to most solar projects in that state. Those reductions are then offset by the increase in other markets, such as Illinois. In fact, the IETA (Illinois Energy Transition Act) has revived its funding for its Adjustable Block Program. This has laid a pathway to complete those waitlisted projects it has yet to finish. 

In summary, solar outlooks in the community segment have been increased by about two percent from the fourth quarter.

The Community PV Forecast for Installations in the US Solar Market Segment

(sourced from SEIA)

The Solar ITC (Investment Tax Credit) for 2021

According to expert forecasts, the extension of the ITC (investment tax credit) should raise the capacity for solar power in the US by about 31 percent over the next five years. Despite trade action and supply chain issues in the solar power industry, the BBB (Build Back Better) Act managed to help the long-term and significant growth for the solar energy market.

In November of 2021, the House’s bill passed the ITC extensions for solar power, which included modifications to local tax credits surrounding renewable energy.

Particularly, the House bill focused on an extension of the ITC (investment tax credit) for the solar energy industry, which allowed many solar power projects to receive the PTC (Production Tax Credit). They then imposed standalone storage credits. Likewise, the bill permitted solar project developers and owners to choose direct payment options for tax credits. This often depends on whether the solar project is considered domestic or not.

It now seems like electricity is on its way out, with solar energy taking over.

The Solar Forecast Scenario for an ITC Extension in the US

(sourced from SEIA)

The National Average Pricing for a PV System by Segments

SEIA and Wood Mackenzie used a bottom-up methodology for modeling to monitor, determine, and report on the national average pricing for a PV system based on segments. This shows each quarter and reports on the solar power systems installed.

The methodology focuses on data collected from other solar industry reports and from monitoring the wholesale pricing of major solar equipment. Below, the graph reflects high-efficiency and mono-PERC modules for all sectors of the solar market. Wood Mackenzie has assumed that the solar equipment will get delivered and procured the same year it’s installed.

Based on the graph below, the PV system prices increase quarter-over-quarter and year-over-year throughout all segments from 2021’s third quarter. Pricing for PV systems increased by one percent (residential), 3.2 percent (non-residential), 0.8 percent (single-axis utility), and 3 percent (fixed-tilt utility). 

The reason for those sudden increases in pricing is the higher cost of components, equipment, freight, and raw material.

The National Average Pricing for a PV System by Segments in Quarter 3 for 2021 and 2020

(sourced from SEIA)

The Market Size for Solar Panel Manufacturing within the US for 2012 to 2022

The market size for the solar panel manufacturing industry in the US made significant and quick increases compared to other areas. In particular, it’s grown 39.5 percent on average per year between 2017 through 2022. With those numbers, the industry is now ranked as the 634th largest within the US and 170th in market size based on appropriate data. Here are other statistics to consider:

  • 7.9 percent growth in the annualized market for solar panel manufacturing between 2017 and 2022
  • -5.3 percent growth in the US market for solar panel manufacturing for 2022
  • $5.2 billion earned in the US market for solar panel manufacturing for 2022

Market Size for Solar Panel Manufacturing within the US (2012-2022)

(sourced from https://www.ibisworld.com/industry-statistics/market-size/solar-panel-manufacturing-united-states/)

The Number of Businesses within the US Solar Panel Manufacturing Industry from 2012-2022

Labor and capital (equipment, machinery, and plants) play a crucial role for the United States’ solar panel manufacturing industry. In fact, the highest costs for a business within this industry (as percentages of revenue) include:

  • Wages at 15.4 percent
  • Rent and utilities at 0.4 percent
  • Purchases at 36.9 percent

However, the states that have more solar manufacturing businesses include Massachusetts at 44 businesses, Texas at 83 businesses, and California at 280 businesses. The data provided indicates that those areas are seeing exponential growth, as indicated above. Let’s break it down for you a bit more:

  • -2 percent annualized growth between 2017 and 2022 for solar panel manufacturing within the US
  • -5 percent growth for 2022 for US solar panel manufacturing businesses
  • 19 manufacturing companies within the US for solar panels in 2022 

Number of Businesses within the US Solar Panel Manufacturing Industry from 2012-2022

(sourced from https://www.ibisworld.com/industry-statistics/number-of-businesses/solar-panel-manufacturing-united-states/)

Rankings by State for Solar PV Installation from Quarters 1 through 3 in 2021

The data below shows you the rankings for each state based on solar panel installation during the first through third quarters of 2021. There are some information surrounding installations for the first three, but the rest of the information is obscured without the full report.

Rankings by State for Solar PV Installation from Quarters 1 through 3 in 2021

(sourced from SEIA)

Conclusion

According to the SEIA and Wood Mackenzie, many things will affect the outlook for solar growth through 2022 and beyond. These include the dismissed AD/CVD petition, the higher cost of components, delayed shipments, supply chain issues, and other logistical problems. 

It’s set to decrease by about 33 percent or 7.4 GWdc. This means that 2022 outlooks and future years within all sectors should drop slightly or change from where they are now. 

Overall, installation growth should continue to increase, but there will be more challenges in the future for installers hoping to get solar panels and other equipment for renewable energy needs.

Solar Feeds is here to help solar installers find appropriate suppliers. Please contact us for assistance. 

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