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The U.S. has experienced record solar growth in recent years, supported by the Biden administration’s Inflation Reduction Act (IRA) and greater access to green funding. The Solar Energies Industry Association (SEIA) has recorded record levels of added solar capacity over the last year, as more solar projects were added to the grid countrywide, significantly increasing the contribution of solar power to U.S. electricity generation.
In quarter two of 2024, the U.S. solar market installed 9.4 GW of capacity, marking a 29 percent increase on the same period in 2023. In Q3, a further 8.6 GW was installed, with a 21 percent increase in installations from 2023. During this period, solar energy accounted for 64 percent of all new electricity-generating capacity added to the U.S. grid. Solar projects now generate enough electricity to power 37 million homes.
The states with the highest capacity of solar power are Texas and Florida, with 7.9 GW and 3.1 GW respectively. While a substantial increase was seen in commercial solar capacity in 2024, the SEIA expects to see a contraction of 26 percent in residential installations by the end of the year.
The U.S. is also investing in strengthening its domestic solar module manufacturing industry, supported by funding from the IRA and Bipartisan Infrastructure Bill (BIL). The domestic module manufacturing capacity rose by over 10 GW to 31.3 GW in Q2 and by a further 9 GW in Q3, to almost 40 GW. This marks a significant increase from mid-2022 when the domestic manufacturing capacity stood at just 7 GW. The first U.S. cell manufacturing plant also opened in Q3 this year. The sharp rise in capacity suggests the influence the IRA and BIL have had on the sector, providing greater funding for green energy projects, as well as tax breaks and other financial incentives.
The U.S. is funding domestic manufacturing and increasing nearshoring activities to help make supply chains more resilient. This is part of the government’s aim to counter China’s dominance in green manufacturing, as well as respond to the severe supply chain constraints experienced during the COVID-19 pandemic. According to the “US Solar Market Insight Q4 2024” report by SEIA and Wood Mackenzie, five manufacturing factories were built or extended in Alabama, Florida, Ohio, and Texas. The report also stated that, at full capacity, the U.S. can now produce enough solar modules to meet almost all domestic demand.
While the future policy outlook under President-elect Donald Trump remains uncertain, there is a strong solar project pipeline across the U.S. The SEIA currently expects the U.S. solar industry to install 40.5 GW in 2024, and an annual average of at least 43 GW between 2025 and 2029. Some of the principal sectoral constraints highlighted by the SEIA were the aging transmission infrastructure, which is not prepared for the influx of new solar power, a lack of skilled labor, and interconnection delays.
The American Clean Power (ACP) Association expects utility-scale U.S. solar installations to see record-breaking growth of more than 32 GW by the end of the year. “The U.S. solar market is projected to grow with a Compound Annual Growth Rate of 6.6 percent from 2025 to 2030, reaching 37 GW of annual new installations in the final year of this decade,” the ACP stated. The organization cited the reduction in polysilicon prices as the driver for the positive short-term outlook but warned that the introduction of tariffs could increase costs.
An ACP November report states that while the incoming Trump administration may work “to change or remove certain portions of the IRA and accompanying guidance… the IRA is unlikely to be completely undone.”
Following record growth in several areas, the solar industry expects to suffer from high import costs under the Trump administration. In November, Trump said he planned to impose “an additional 10 percent tariff, above any additional tariffs” on imports from China, as well as a 25 percent tariff on imports from Canada and Mexico.
U.S. trade officials also set preliminary tariffs on solar cells from the four main export countries in Southeast Asia this year, after U.S. manufacturers complained that unfairly cheap products were flooding the market. The Commerce Department established preliminary anti-dumping rates of 53.3 percent to 271.28 percent for imports from Vietnam, 125.37 percent for Cambodia, 77.85 percent to 154.68 percent for Thailand, and 21.31 percent to 81.24 percent for Malaysia. China currently dominates the global solar supply and has large-scale operations in all four countries. A final decision on anti-dumping tariffs is expected by April 2025.
Despite the anticipated introduction of tariffs on solar cells, and the potential reduction in green funding under President Trump, the solar energy project pipeline remains strong. This year has seen record additions of commercial solar power. However, to encourage utility-scale additions in the coming years, greater investment must be provided to improve the U.S. grid and prepare it for the influx of solar-generated electricity.
