Market Insights

Harnessing the Power of the Sun: A Comprehensive Mid-Year Solar Outlook

August 26, 2023 by Shannon Cuthrell

Recent market research projections bode well for solar PV deployment in 2023 and beyond. Here’s a briefing. 

Several recent projections spell solid growth for the solar photovoltaic (PV) market in the U.S. and globally. 


community solar installation

This community solar installation was connected to the grid in early 2023 atop an Extra Space Storage facility in New Jersey. It’s one of a growing number of community solar projects using roof space from storage providers. Image used courtesy of Solar Landscape


Wood Mackenzie’s second-quarter 2023 market outlook estimates global solar PV installations will jump 5% annually from 2022 to 2032, on average, hitting 270 gigawatts (GW) of annual capacity in 2023 and then 333 GW in 2032. Meanwhile, a report from the International Energy Agency (IEA) indicates solar will claim two-thirds of global renewable capacity growth this year amid rising utility-scale and small distributed installations. Smaller systems (residential and commercial) are expected to account for half of 2023 solar deployment, surpassing onshore wind’s estimated share.

The market is especially strong in the U.S., where the industry is expected to add 236 GW to the existing installed base of 142 GW between this year and 2028, according to a report from Wood Mackenzie and the Solar Energy Industries Association (SEIA). 

The IEA projects that U.S. renewable capacity additions will rebound after last year’s trade restrictions and supply chain challenges in 2022. Annual solar PV additions are expected to set a new record in 2023, partially driven by tax incentives introduced in last year’s Inflation Reduction Act, which the IEA notes will realize its full effect after 2024 and alleviate uncertainty for renewable projects until 2032. 


Solar PV installation estimates in residential, non-residential, and utility markets through 2028

Solar PV installation estimates in residential, non-residential, and utility markets through 2028. Image used courtesy of SEIA/Wood Mackenzie

Growing US Solar Capacity

The U.S. Energy Information Administration (EIA)’s latest Short-Term Energy Outlook reports that the electric power sector plans to add 27 GW of solar generating capacity by late 2023 and another 31 GW in 2024. 

Indeed, several projects are in various stages of development across the U.S. Business intelligence provider FirmoGraphs tracked five newly proposed projects in its Power Generation and Supply Market Recap, including a 1.5 GW solar + battery storage project from EDF Renewables in Nevada (expected to be completed in late-2028), an 800-MW project by SolUnesco in Virginia (complete in 2030), and a 600-MW site by Winston FC Solar in Nevada (beginning operation in late-2030). 

While utility-scale solar projects still dominate capacity additions, new tax credits have been introduced to incentivize solar installations among consumers, covering a portion of solar panel purchases. Developers and other stakeholders also benefit from new investment and production tax credits via the Inflation Reduction Act. 

According to the EIA, tax expenditures for solar applications are the largest share of subsidies for clean energy, partly due to rapid industry growth and because companies can claim the full solar investment tax credit once their asset enters operation. 

Still, despite tax incentives, economic headwinds have residential solar customers pulling back on purchases. A few of the country’s leading solar players have mentioned a decline in this segment in their latest earnings reports. 

For example, SolarEdge notes that despite hitting record revenues of $991 million in the second quarter, the U.S. residential solar market is seeing some headwinds from high interest rates. Similarly, SunPower points to a softer market for residential solar, with higher interest rates prompting near-term stress on regional value propositions. 


Community Solar Development

Though 2023 started with low volumes in the community solar market, Wood Mackenzie still projects that this category will add 1 GW of new capacity by the end of the year, with installations growing at an average of 8% annually through 2028. 

Self-storage facility owner Public Storage and developer Solar Landscape recently started construction on the first of 133 community solar installations that will power over 10,000 homes in New Jersey, Maryland, and Illinois. 

At 87.5 MW, the companies say it’s one of the country’s largest portfolios accessible to low- and moderate-income residents. The program allows residents to subscribe to local installations covering 8 million square feet of Public Storage’s rooftop space. Customers will receive discounted electricity and additional savings, expanding access to customers unable to directly install solar panels due to high costs, residential restrictions, or insufficient sunlight. 


Supply Chain Challenges and Interconnection Delays

The U.S. solar market appears to be recovering from last year’s supply chain challenges. EIA data shows that while solar accounted for the largest share (5.9 GW or 35%) of capacity coming online in the first half of 2023, supply chain constraints shaved 4.6 GW off developers’ initial plans at the beginning of the year. That shortfall will soon close, as the EIA expects developers will add 19.3 GW of solar in the second half of 2023, including the remaining 4.6 GW initially scheduled for earlier this year. 

The market will also benefit from recent reforms addressing long interconnection queues, where over 2 terawatts (TW) of renewable capacity awaits grid connection.


A regional snapshot of interconnection queues across the country’s transmission providers

A regional snapshot of interconnection queues across the country’s transmission providers. Image used courtesy of S&P Global Commodity Insights


Regional transmission organizations have long seen solar projects delayed in the interconnection queue, one of many permitting challenges for the solar market. However, new Federal Energy Regulatory Commission policies may ease the years-long clog with various changes to speed up queue processing, including implementing a new cluster study process to evaluate several facilities at one time and incorporating new technologies into interconnection procedures.