US solar installations to benefit from Inflation Reduction Act in 2024, report says

The U.S. solar industry is expected to continue its momentum in 2024 after accounting for over 50 per cent of new electricity capacity additions to the grid last year, according to a report published by Wood Mackenzie and the Solar Energy Industries Association on Wednesday. Companies and residents have aimed to capitalize on U.S. President Joe Biden's Inflation Reduction Act, which provides generous tax credits for EVs and clean energy technologies such as wind and solar farms.

"A high case for U.S. solar with increased supply chain stability, more tax credit financing and lower interest rates would increase our (solar installation) outlook (by) 17 per cent," said Michelle Davis, head of Global Solar at Wood Mackenzie and lead author of the report. "A low case with supply chain constraints, less tax credit financing and static interest rates would decrease our outlook (by) 24 per cent."

The report said that an additional five gigawatts (GW) over last year's capacity could be installed in 2024. Growth-rate expectations for the commercial, community and utility-scale segments are 19 per cent, 15 per cent and 26 per cent for the year, respectively.

The solar sector added 32.4 GW in 2023, 51 per cent higher than in 2022, primarily due to increasing supply chain stability as a backlog of projects were completed. Solar imports had been hindered by trade actions in 2022, such as tariffs on imports from certain Southeast Asian countries and concerns around forced labour practices. Last year, Texas topped the list for total solar capacity on a rise in utility-scale solar installations, which grew 77 per cent from 2022.

California led residential and commercial installations in 2023, as consumers moved to take advantage of the state's current net metering rules before the switch to new net billing rules, known as NEM 3.0, in April this year. However, California's residential solar installation is expected to decline by 13 per cent in 2024 on the shift to NEM 3.0, along with higher interest rates weighing in other states, the report said.