The U.S. community solar market installed a record-breaking 1.7 GW of capacity in 2024, a 35% increase from 2023, according to a new report by Wood Mackenzie in collaboration with the Coalition for Community Solar Access (CCSA).

The report said long-term growth of the community solar market, however, hangs in the balance because of the policy uncertainty in the U.S.

New York, Maine, and Illinois led the growth, with all three states breaking annual records and accounting for 83% of national volumes. Cumulative community solar installations are now at 8.6 GW.

Community solar refers to local solar facilities shared by multiple community subscribers that receive credits on electricity bills for their share of the energy produced.

A report by Wood Mackenzie and CCSA in mid-2023 indicated strong headwinds for the sector because of supply chain challenges.

According to another report by Wood Mackenzie and Solar Energy Industries Association, the U.S. solar industry installed 8.6 GW capacity in Q3 2024, a 21% year-over-year increase but a 13% decline from the previous quarter.

Caitlin Connelly, research analyst and lead author of the report stated that despite impressive 2024 installation volumes, the top state markets are saturating quickly and will not be able to sustain the same levels of growth long-term. She said, “Additionally, emerging markets have been slow to ramp up, and program size caps limit the potential for growth in these states to make up for declines in larger markets.”

In Wood Mackenzie’s base case, national community solar growth will contract 8% annually on average through 2029, culminating in over 15 GW of cumulative installed community solar projects. However, depending on how policy changes and interconnection reform materialize, the growth outlook could vary greatly.

The new U.S. administration has fueled extreme uncertainty in the solar sector, but material actions so far have resulted in minimal changes to the base case outlook.

“However, in a low case representing an extreme downside scenario, our five-year outlook contracts 40% compared to the base case. By contrast, business as usual at the federal level and rapidly improving state policy and interconnection conditions result in a high case outlook 37% higher than the base case,” Connelly added.

Market Expansion

The report said community solar could receive a boost from new state markets that have proposed legislation for the sector. Legislation in Pennsylvania, Ohio, Missouri, Iowa, Georgia, Washington, and Wisconsin has progressed, signaling strong bipartisan support and the potential for new market expansion. If these legislations pass, new community solar state markets have the potential to boost base case outlook by at least 16% by 2029.

Community solar capacity directly serving low-to-moderate income (LMI) subscribers is concentrated in New York and Massachusetts. The two states comprise 49% of the 1 GW of LMI-serving community solar. LMI subscribers make up 14% of the total deployed community solar capacity.

Stricter LMI subscriber requirements in emerging state markets will result in LMI capacity making up nearly 18% of total community solar capacity by 2026.

The top five community solar installers secured 19% of the market in 2024, down from 25% in 2023. The competitive landscape for asset owners is significantly more exclusive, dominant, and region-specific than that of community solar installers. The top 10 community solar asset owners secured 54% of capacity installed in 2024 and 40% of cumulative capacity. Top asset owners include Nexamp, AES Clean Energy, and Nautilus Solar.

Jeff Cramer, President and CEO, CCSA, said, “Community solar’s record-breaking growth in 2024 is a clear sign that demand for affordable, distributed energy is stronger than ever.”