In Q2 2024, 9.4 GW of new solar power capacity was added in the US, a record second quarter. Solar module manufacturing capacity in the U.S. increased by over 10 GW to 31.3 GW, according to the latest report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie.

In a quarter-over-quarter comparison, the capacity addition was down 21% but was 29% higher than the same quarter in 2023. This expansion is largely attributed to ongoing federal clean energy initiatives boosting solar manufacturing and project deployment.

Solar accounted for 67% of all new power capacity added to the US grid in the first half of 2024.

The impact of the Inflation Reduction Act (IRA) has been particularly noteworthy. In two years since its implementation, 75 GW of new solar capacity has been added to the grid. This addition represents over 36% of all solar capacity installed in the United States.

Abigail Ross Hopper, SEIA president and CEO, emphasized the industry’s rapid job creation and economic growth across all 50 states, particularly in battleground states like Arizona, Nevada, and Georgia. “We are now manufacturing historic amounts of solar energy in America, and soon, we will have enough domestic module production to supply nearly all U.S. demand for years to come,” he added.

Texas continues to lead, installing 5.5 GW_dc of solar capacity in the first half of 2024 alone. Other states making significant strides include Florida (2.9 GW_dc), Nevada, Ohio, and Arizona, all of which rank among the top 10 solar states in 2024.

PV pricing

PV system costs declined across all market segments in Q2 2024. Module price declines offset the increased balance of system (BOS) and labor costs. Module costs for the distributed generation segment fell by an average of 40% year-over-year, resulting in a 6% and 12% decline in residential and commercial PV system costs, respectively. Demand in the distributed segment remains sluggish due to higher interest rates, and the supply imbalance for modules continues to put downward pressure on module costs.

For the first time in over two years, the utility segment also experienced a decline in total system costs. Equipment and labor have become more expensive due to inflation. Overall costs for the fixed-tilt and single-axis tracking systems were down 2% and 1%, respectively. The price drop can be attributed to a 16% year-over-year decline in the average module price for the segment driven by a module supply/demand imbalance and a dip in raw material costs.

Market Segments and Challenges

During the quarter, 7.6 GW_dc of utility-scale solar projects were installed, a 59% increase year-over-year but a 23% decline from the previous quarter. The first quarter installations were high as projects finally came online after various delays in 2023.

Residential solar installations dropped to 1.1 GW, the lowest in nearly three years. The capacity additions were down 10% quarter-over-quarter and 37% year-over-year.

California continued to drive the fall in residential solar, declining 36% from the first quarter as it transitioned to net billing. According to the report, residential solar installations are expected to plunge in 2024, with a 19% drop in residential solar. Installers and sales companies reported lackluster sales volumes in the last few months. Major bankruptcies (Titan Solar and SunPower) will significantly lower installation volumes in the short term.

In Q2 2024, 427 MW_dc was added under the commercial solar segment, 5% less than Q1 2024 and 6% more than Q2 2023. California and Illinois combined contributed to robust installations of 230 MWdc. New Jersey and New York had strong quarters, though the pipelines have declined over the past few quarters.

The community solar segment saw installations totaling 270 MW_dc in Q2 2024, a 12% fall quarter-over-quarter and year-over-year. A few states recorded quarter-over-quarter growth, but key markets like Maine, Massachusetts, and Illinois saw a decline in installations. Legislation to develop new community solar programs is pending in several states, and progress has been slow.

Michelle Davis, head of global solar at Wood Mackenzie, noted that the industry must navigate several obstacles, including interconnection backlogs, electrical equipment shortages, and labor constraints.

Installations in 2024 are expected to decline by 4% to 38.9 GW_dc, caused by a 2% decline in the utility-scale segment and a 19% drop in the residential segment. Utility-scale solar is likely to reach 29.8 GWdc. Some projects could be delayed until 2025 due to the lengthening lead times for critical electrical equipment and the limited labor availability from EPC firms. The outlook for 2025 is 31.5 GWdc.

The antidumping and countervailing duties (AD/CVD) could have negligible impacts on the utility-scale segment. A substantial amount of module inventory (including both crystalline silicon and non-subject thin film) has already been allocated to current projects—about 35 GW as of Q1. Many of these projects have already begun construction. This inventory is expected to supply projects through the end of this year and potentially for part of next year.

Residential solar is expected to reach 5.6 GWdc in 2024, commercial solar is expected to grow 8%, and community solar could be flat compared to 2023.

The solar industry is poised for continued growth. From 2024 through 2029, the US solar industry will likely install over 250 GWdc of capacity.

By 2029, total U.S. solar capacity is expected to double to 440 GW.

The solar market in the U.S. installed 32.4 GW capacity in 2023, a 51% YoY increase.

Recently, the U.S. proposed new incentives under the Inflation Reduction Act by offering tax credits for electricity produced with low or zero greenhouse gas emissions, aligning financial assistance with environmental objectives.