The U.S. added 6.4 GW of small-scale solar capacity in 2022, which marks the highest annual growth ever recorded in the segment, according to a report by the U.S. Energy Information Administration.

Small-scale solar, often referred to as distributed solar or rooftop solar, encompasses solar-power systems with a capacity of 1 MW or less. The majority of small-scale solar capacity in the U.S. resides atop residential buildings in the form of rooftop solar modules.

The report indicated that the journey began in 2014 when small-scale solar capacity in the country stood at a modest 7.3 GW. In 2022, the small-scale solar capacity has shot up to 39.5 GW, constituting nearly one-third of the total solar capacity.

Catalysts for Growth

Multiple factors have driven the expansion of small-scale solar capacity over the past decade. Tax credits, incentives, supportive public policies, and elevated retail electricity prices have provided fertile ground for this growth.

The decrease in the cost of solar modules has been equally significant, making renewable energy more accessible to the masses.

California has emerged as the leader in small-scale solar capacity, contributing 36% of the total. The state’s satisfactory sunshine, attractive incentives, and relatively high electricity prices have been pivotal in driving rooftop solar adoption.

California’s Net Energy Metering Program, which permits surplus electricity generated by rooftop solar panels to be fed back into the grid for credits, further incentivizes solar investments.

Starting in 2020, California mandated the installation of solar panels on newly constructed single-family homes and multifamily buildings up to three stories high.

Surprisingly, mid-Atlantic states with less year-round sunshine, namely New York and New Jersey, occupy the second and third positions in small-scale solar capacity. In recent years, sunny states like Texas and Arizona have been narrowing the gap.

The report noted the consistent and generous solar incentives offered by New York and New Jersey through longstanding state policies have been instrumental in fostering small-scale solar growth.

The EIA report said that it was essential to consider population-adjusted metrics to gain deeper insights into the prevalence of small-scale solar capacity within states. Although California boasts the highest overall small-scale solar capacity, it is Hawaii that leads in small-scale solar penetration, with 541W per capita.

Historically reliant on oil-fired power plants for a significant portion of its electricity, Hawaii faced high electricity bills due to expensive fuel imports.

However, as the costs of solar panels plummeted, many homes and businesses in Hawaii embraced solar energy. This transition not only reduced their electricity bills but also aligned with the state’s ambitious goal of generating 100% of its electricity from renewable sources by 2045.

According to a previous report by the EIA, the capacity of coal-fired power plants in the U.S. could reduce by ~88% from the 2022 levels by 2050 as environmental regulations raise costs and new plants powered by natural gas and renewable energy displace the aging fleet.

Earlier in March, EIA stated that around 82% of the new utility-scale generating capacity planned to come online in the U.S. in 2023 will comprise wind, solar, and battery storage.