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Solar rebound after "chaotic" 2022

Alan Neuhauser
Mar 9, 2023
Data: Wood Mackenzie; Chart: Jared Whalen/Axios

Trade disputes and grid-connection delays forced a double-digit drop in new solar installations last year, making 2022 one of the worst on record for the U.S. solar industry — except for the residential market.

Why it matters: Last year is one that investors in the utility, commercial and community solar markets would like to forget. And with analysts projecting a rapid bounce-back, they might soon get that chance.

  • Residential solar companies are meanwhile skipping to the bank.

By the numbers: The U.S. added 20.2 GW in 2022, a 16% drop from the year before, per a year-end report from Wood Mackenzie, commissioned by the Solar Energy Industries Association.

  • Utility projects were hit the hardest. They plummeted 31% from 2021.
  • New commercial-scale developments tumbled 16%, and community solar 6%.

Yes, but: The residential market saw 40% growth in installed capacity. That's the biggest annual jump since 2015.

  • About 6% of U.S. homes now have solar. That figure is on track to reach 15% as soon as 2030.

What's happening: As we've previously reported, trade issues and interminable interconnection queues are hammering solar developers and investors, especially those involved in large-scale projects.

  • The Commerce Department's anti-circumvention investigation brought solar module imports to a near standstill.
  • Next came the Uyghur Forced Labor Prevention Act, sparking a U.S. Customs crackdown on forced labor in China that has so far focused on the big suppliers for utility-scale projects.

Meanwhile, the wait to connect a project to the grid has doubled in some regions.

Be smart: Residential solar installers tend to use more domestic modules, and often procure those panels from distributors who carry inventory.

  • "These factors insulated residential solar from the various trade issues last year," Wood Mackenzie's Michelle Davis tells Axios.
  • That made for "a record-breaking but chaotic year" in the segment, as the firm put it in its analysis.

What's next: Analysts expect a robust recovery — eventually. Grid operators are working to clear interconnection backlogs, U.S. Customs has released some modules from detention, and new solar investments keep coming.

  • "All signs point to broad market recovery, but timing is hard to predict," Marlene Motyka, Deloitte's U.S. renewable energy leader, tells Axios.
  • "Private equity investments and new market entrants ... [have] been driving strong M&A activity. Renewable developers are announcing huge growth plans and in some cases changing their business model to not only develop projects but also construct and own assets."

Plus: America's solar panel manufacturing capacity is on track to triple by the end of this year to 25 GW.

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