Solar power is experiencing rapid growth, with the global installation of new solar capacity reaching 239 GW in 2022, surpassing the Terawatt (TW) scale. This marks a 45% increase in solar power capacity compared to the previous year. The favorable market trends observed in the early months of 2023 indicate the potential for another robust year of solar energy. It is expected that by the end of 2023, an additional 341 GW of solar capacity will be added to the grid, representing a remarkable 43% growth rate.

The reason behind this remarkable achievement is clear. It can be attributed to the unparalleled versatility and solar power advantages, which can facilitate individual energy self-sufficiency while also allowing for the rapid deployment of large-scale projects at competitive costs. Despite a slight increase in the levelized cost of electricity (LCOE) for solar, primarily due to supply chain challenges and inflation, solar power generation still stands as a significantly more cost-effective option compared to new fossil fuel and nuclear power sources.

Impact of Interest Rates on U.S. Renewable Energy

Undoubtedly, the year’s most critical business narrative revolves around the surge in interest rates and its far-reaching consequences. One area of great concern is its impact on renewable energy, a key climate-focussed investment. Higher interest rates can pose a major obstacle for renewable energy projects as they necessitate substantial upfront borrowing, driving up project costs. Conversely, conventional energy sources like gas and coal rely on fuel costs rather than upfront project expenses.

In Q2 of this year, the residential solar market in the United States achieved its fifth consecutive record-breaking quarter for customer additions and installations. The demand for solar panels for homes, driven by volatile retail rates amid inflation, is soaring in both third-party ownership customer and ownership segments. While loans have been the dominant financing option, the passage of the IRA and rising interest rates pose a challenge to this trend. The latest report on residential solar finance provides insights into these developments, offering trends and forecasts for third-party ownership (leases and power purchase agreements) and customer ownership (cash and loan purchases) markets.

U.S. Solar Energy Market Analysis

The solar energy market in the United States is poised for significant growth, with an estimated capacity of 164.2 GW by year-end, projected to reach 352 GW in the next five years at a robust CAGR of 16.48%.

During the forecast period, the market for the solar energy industry is anticipated to benefit from declining solar PV costs and favorable government policies. However, challenges may arise from the increased adoption of alternative, clean energy sources and rising natural gas consumption.

Notably, Perovskite-based cells have gained attention in recent years due to their advantages, including ease of manufacturing high efficiency, and excellent semiconductor properties. These cells hold promise for achieving solar-to-electric efficiency comparable to silicon-based PV Cells. Therefore, advancements in PV Cell manufacturing technology could lead to mass-scale production and create growth opportunities in the market.

U.S. Solar Energy Market Trends

Solar energy affordability in the U.S. has made it more accessible, along with experiencing significant growth and maturation. In 2022, solar power saw an 8.3% annual growth rate, with installations growing 30-fold over the past decade, resulting in a totalled installed capacity of 145,598 gigawatt-hours.

Solar power has become economically competitive with conventional sources in states like California, Hawaii, and Minnesota, thanks to robust federal policies like the Solar Investment Tax Credit (ITC), falling costs, and increasing demand for clean electricity in both the private and public sectors.

California leads the nation with over 37 gigatonnes of installed solar PV capacity, followed by Texas with about 15 gigatonnes. Utility-scale solar installations saw a 66% increase in the first quarter of 2022, accounting for 54% of all new electricity-generating capacity additions. This trend is expected to continue, solidifying solar PV’s dominance in the US solar energy market throughout the forecast period.

Rising Efficiency of Solar Panels is Expected to Drive the Market

The solar panel market is set to thrive thanks decreasing costs and improved efficiencies. Over the past decade, global solar PV panel prices have fallen by 90%, along with reductions in other components, resulting in a lowered LCOE for both the residential and utility-scale solar PV.

While the rate of decline in solar PV panel prices may slow slightly due to numerous factors, they are still expected to decrease in the forecast period. The United States has witnessed significant reductions in the cost of residential, commercial rooftop, and utility-scale PV systems since 2010.

These falling prices are driving residential and commercial consumers to adopt rooftop solar PV systems or energy cost savings, and they enable large-scale utility projects to offer Power Purchase Agreements (PPA) at competitive rates.

Solar PV panel efficiency has also steadily improved over the last decade and is projected to continue to do so. Some of the most efficient panels on the market now reach up to 22.8% efficiency, while most panels range from 16% to 18% efficiency.

These trends, coupled with declining costs, are expected to drive growth in the US Solar Energy Market in the coming years.

In summary, the U.S. solar energy market is booming with rapidly growing capacity favorable trends. Despite challenges posed by fluctuating interest rates, solar power remains competitive.

EMMVEE Group, a key solar panel manufacturer in the U.S., contributes to this momentum, making solar energy more accessible and affordable and enabling the solar market to continue flourishing.