Slower solar industry growth may dampen U.S. renewable power expansion
SACRAMENTO, the United States, Jan. 20 (Xinhua) — The U.S. solar industry is expected to face challenges in the coming years, slowing down growth in both the residential and utility-scale segments. This slowdown could hinder the expansion of renewable power in the country.
According to the U.S. Energy Information Administration (EIA), solar energy was projected to lead the nation’s electricity generation growth for the next two years. The agency estimated that the U.S. would add 36 gigawatts (GW) of new solar capacity in 2024 and 43 GW in 2025.
However, the reality on the ground indicates a different picture. California, the largest solar market in the United States, has been hit particularly hard. Solar developers in the state have been facing financial difficulties, with approximately two-thirds of residential solar installers struggling to sustain their operations.
The California Solar and Storage Association (CALSSA) reported that 63 percent of its members have experienced significant cash flow issues. The situation has raised concerns within the industry, with fears that there may be more fallout in the coming months.
These concerns are echoed in a report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, which highlighted the impact of elevated interest rates and changes in state regulations on the solar market.
Residential solar companies across the country have faced declining sales due to higher interest rates, discouraging potential customers from investing in solar installations. The Federal Reserve’s efforts to curb inflation by raising rates have affected loan costs, including those for financing solar panels.
In California, the challenges are further exacerbated by a modification in the net energy metering policy, which has reduced earnings for homeowners selling surplus electricity back to the grid. The policy change has resulted in a 75 percent drop in compensation for homeowners and has significantly impacted the state’s rooftop solar power market.
The utility-scale sector has also been affected by higher financing costs, transformer shortages, and interconnection bottlenecks. As a result, the SEIA report revealed that the number of new contracts signed for utility-scale projects is at its lowest level in a quarter since 2018.
In addition, the government’s tariffs on imported solar products have raised prices for solar modules and utility-scale solar installations in the U.S. This has not only made domestic companies less competitive but has also increased costs for developers and consumers.
Industry experts argue that the current challenges facing the U.S. solar industry could hinder the country’s overall renewable power expansion. Despite the previous optimistic forecasts, the slowdown in solar growth poses a significant obstacle to achieving the desired objectives.
It is crucial for policymakers and industry stakeholders to address the economic and policy headwinds, providing support and incentives to the solar industry. Overcoming these challenges will be essential to ensure a sustainable and resilient renewable energy future for the United States.
