Your browser is not supported. Please update it.

22 February 2023

US utility-scale solar in abrupt 2023 revival

The US Energy Information Administration (EIA)’s January release of monthly data features 23.5 GW of utility-scale solar to be built over the twelve months from December 2022 to November 2023 inclusive, utterly dwarfing the 6.3 GW from wind, 135 MW from assorted biomass, hydro and geothermal, as well as the 5.2 GW additions planned for gas and the 9.8 GW planned reduction in coal capacity. The same metric has 8.4 GW of batteries and 1.1 GW of nuclear.

As can be seen in this EIA map, the distribution of solar includes a strong “rust belt” presence ins addition to the usual southern suspects. The EIA expects 29.1 GW of utility-scale solar this year, implying several GW in December alone – actually the EIA predicts over 9 GW built in this year’s December. Add to that around 10 GW rooftop for almost 40 GW of photovoltaics installed in the US this year.

The two reasons for this 2023 upswing, which will be doubled down on in 2024 with still larger installation figures, are simple – IRA subsidies have come into force and module import barriers have subsided at least temporarily. So demand is able to come into full play alongside the delayed projects from 2022, those waiting for modules and those waiting expectantly for subsidies.

In 2022, Utility-scale solar was a plurality of new capacity installations at over one-third of the total. This was a weak result. Renewables dominate and utility-scale solar rightly dominates US renewables.

Judging by a simple visual inspection of our graph of US half-yearly installs (which likely underestimates December’s performance a little), if the upward trend from 2020 to 2021 had continued – as it did in other countries – then an extra 1 GW would have been installed in H1, and an extra 8 GW in H2 – so 9 GW of projects were delayed if we go by this crude metric.

Perhaps not coincidentally, 9 GW is the total scale of modules detained by customs under the Uyghur Forced Labor Prevention Act (UFLPA), a process which is reported to have reversed, with seized product being released across October to December.

As for the Antidumping and Countervailing Duties investigation into South-East Asian modules imports, it seems liable to cut off half of imports from the region once the findings come into force. Half of the companies examined were found to be circumventing, with not enough of the cell manufacturing process truly taking place outside of China. This wiped out a large segment of US solar module supplies.

President Biden announced a 24-month tariff exemption in June 2022, so that will last through to the end of H1 2024. This current period of H1 2023 is when the solar trade can come roaring back, to meet soaring demand, delayed projects, and stockpiling for after the moratorium ends. Especially since there is a possibility, albeit not too likely, that the Republican Congress will remove the moratorium.

Post-moratorium manufacturing arrangements are being made with billions of investments involved, but demand will also be huge. Some 72 GW of domestic solar manufacturing capacity is said to be in preparation for 2026, but our forecast indicates that this will be slightly less than demand, and our forecast is definitely not too radical. US domestic production capacity will have to be supplemented by some fraction of South-East Asian and other sources, such as South Korean and Indian product. There will be module supply constraints in the US for the next five years on and off, but in patches with various workarounds.

On the demand side, in June a coalition of four developers – AES Corporation, Clearway Energy Group, Cypress Creek Renewables, and DE Shaw Renewable Investments – formed the US Solar Buyer Consortium, which launched a competitive RfP for between 6 GW and 7 GW of annual solar module supply from 2024. The consortium is AES-led and also promises $6 billion investment into the supply chain. According to AES , the Department of Commerce AD-CVD investigation into South-East Asian module imports put $52 billion of utility-scale project development at risk, or 42% of the “known” project pipeline, with 34 GW of projects to be left unbuilt in a worst-case scenario.

AES refers to this eventuality with the phrase “If the Auxin petition succeeded,” referring to the very small module manufacturer which put its name to the petition to the Department of Commerce that prompted the investigation – previous petitions were rejected on grounds that the petitioners were anonymous.