According to the latest US Solar Market Insight Report, released by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, the US solar market has installed a record 5.7 GW of solar capacity in Q2 2021; a 45% year-over-year (YoY) increase compared to the same period last year.
The market also witnessed a 14% quarter-over-quarter (QoQ) growth compared to 5 GW of solar capacity installed in Q1 2021. With Q2 additions, the country achieved 3 million installations across all segments of the market, the majority of which are residential solar systems.
In the first half of 2021, solar accounted for 56% of all new power capacity additions in the United States. In Q2 2021, the utility-scale sector accounted for 4.2 GW of new installations, of which Texas, Arizona, and Florida installed around 3 GW of solar capacity.
Meanwhile, residential solar sales continue to grow, with the sector adding 974 MW in Q2 2021, a 46% increase compared to the same period last year.
The report identifies commercial and community solar as separate market segments. The capacity added under the commercial solar segment was 354 MW, a 31% growth from Q2 2020, while 177 MW was installed under the community solar segment, an increase of 16% from Q2 2020.
A total of 9.3 GW of new utility-scale solar power purchase agreements were signed in Q2 2021, bringing the utility-scale contracted pipeline to around 85 GW.
The report also states that system cost across all segments increased due to supply chain constraints despite record-setting new capacity additions in Q2 2021. Solar system cost increased QoQ and YoY in every market segment for the first time since 2014; costs in the utility-scale solar segment increased the most with about 6% YoY.
In addition to recent enforcement actions on Xinjiang metallurgical grade silicon, two new tariff petitions have been filed, which could further escalate supply chain constraints and increasing solar system costs.
According to forecasts from Wood Mackenzie, the United States will add an average of over 29 GW of solar capacity annually through 2026. However, the deployment pace is short of reaching President Joe Biden’s 2035 clean energy targets. The industry needs to install over 80 GW of solar annually from 2022 through 2035 to achieve President Biden’s targets.
The solar industry will continue to set annual installation records until the solar investment tax credit (ITC) fully phases down in 2024. However, the growth is expected to be flat in 2025 and 2026.
SEIA president and chief executive officer, Abigail Ross Hopper, said, “This is a critical moment for our climate future, but price increases, supply chain disruptions, and a series of trade risks are threatening our ability to decarbonize the electric grid. If we want to incentivize domestic manufacturing and drive enough solar deployment to tackle the climate crisis, we must see action from our federal leaders.”
Principal analyst at Wood Mackenzie and lead author of the report, Michelle Davis, said, “The solar industry continues to demonstrate strong quarterly growth, and demand is high across every segment. But the industry is now bumping up against multiple challenges, from elevated equipment prices to complex interconnection processes. Addressing these challenges will be critical to expanding the industry’s growth and meeting clean energy targets.”
According to the US Solar Market Insight 2020 Year-in-Review report, the US solar industry grew 43% and installed a record 19.2 GW capacity in 2020.