The utility-scale solar market in the United States is on the verge of significant growth and fluctuations, as the American Clean Power Association’s (ACP) latest report indicates. This report projects that 2024 will witness a record high of over 32 GW of installations, partly fueled by the requirement that modules imported during the anti-circumvention tariff moratorium be operational by December 2024. However, this growth is expected to see a decline in the following year, with installations around 27 GW in 2025, marking a 16% drop. Despite the fluctuations, the solar market is anticipated to recover and maintain an upward trajectory, with projections indicating it will reach 32 GW by 2027 and 34 GW annually by 2028.
Projected Growth and Fluctuations
Anticipated Record Installations in 2024
The ACP report highlights the anticipated surge in utility-scale solar installations, with over 32 GW expected in 2024. This record growth is largely driven by the timing requirement for modules imported during the anti-circumvention tariff moratorium to be operational by the end of 2024. This surge is seen as a critical milestone for the solar industry, marking a year of unprecedented growth. Analysts believe this rapid increase is not only a result of favorable policy conditions but also a reflection of the ongoing investment and technological advancements within the solar sector. Nonetheless, the market is set to face a downturn in 2025 with a projected 16% decline, bringing installations down to around 27 GW. This fluctuation highlights the volatile nature of the sector, influenced by policy changes and market dynamics.
Despite this temporary setback, the solar market is expected to recover swiftly. By 2027, installations are projected to climb back to 32 GW, with further growth leading to 34 GW annually by 2028. The resilience of the market is attributed to continued advancements in solar technology, decreasing costs, and supportive policies that encourage renewable energy adoption. The long-term outlook remains positive, driven by the increasing demand for clean energy and the global push towards a sustainable future.
Challenges and Uncertainties
However, the path to sustained growth in the U.S. utility-scale solar market is not without challenges. The projected growth rate of the U.S. solar market from 2025 to 2030 is expected to have a Compound Annual Growth Rate (CAGR) of 6.6%, resulting in 37 GW of annual new installations by 2030. This optimistic growth forecast is set against a backdrop of political uncertainties, particularly with the potential policy changes under the incoming second Trump administration and a Republican Congress. These changes may attempt to alter the Inflation Reduction Act (IRA), a crucial policy supporting renewable energy deployment. Although it is unlikely to be completely dismantled, any modifications could impact the growth trajectory and investment climate for solar energy projects.
Moreover, the collaboration between ACP and S&P Global Commodity Insights to launch the biannual Solar Market Monitor is a strategic move to provide comprehensive data and insights into the supply chain, technology, and demand for solar energy. This partnership aims to enhance market transparency and enable stakeholders to make informed decisions. Nevertheless, potential new tariffs under a Trump administration could pose risks, increasing capital costs and driving up the levelized cost of electricity (LCOE) for utility-scale solar projects. These factors underscore the importance of navigating the complex policy landscape while leveraging data-driven insights to support the solar market’s growth.
Trends in Levelized Cost of Electricity and Market Dynamics
Decline in Levelized Cost of Electricity (LCOE)
One of the most significant trends highlighted in the report is the expected decline in the levelized cost of electricity (LCOE) for utility-scale solar projects. Starting at an average of $46/MWh in 2024, the LCOE is projected to decrease to $38/MWh by 2030. This trend reflects the ongoing advancements in solar technology, economies of scale, and reductions in material costs. However, regional variations persist due to differences in soft costs such as wages and land prices. For instance, areas with higher labor costs or more expensive land might experience a slower decline in LCOE compared to regions with more favorable economic conditions for solar development.
The recent drop in polysilicon prices has also positively impacted the short-term LCOE outlook. Polysilicon, a key raw material used in solar panel production, has seen price reductions, which in turn lower production costs and improve project economics. This decline in costs is expected to drive more investment in utility-scale solar projects, further supporting the market’s growth. Despite these positive developments, the potential imposition of new tariffs under the Trump administration could reverse these gains by increasing capital costs, highlighting the delicate balance between market forces and policy decisions.
Resilience Amid Economic Challenges
The utility-scale solar market in the United States is poised for notable growth and changes, according to the American Clean Power Association’s (ACP) recent report. The forecast for 2024 predicts a record-breaking installation of over 32 GW, driven in part by a requirement that imported modules during the anti-circumvention tariff moratorium must be operational by December 2024. Following this peak, the market is expected to decline, with installations dropping to about 27 GW in 2025, marking a 16% decrease. However, despite these fluctuations, the solar market is anticipated to bounce back and maintain a positive growth trend. Projections indicate that installations will reach 32 GW by 2027 and further increase to 34 GW annually by 2028. This recovery and steady growth are indicative of the sector’s resilience and potential for long-term expansion, underscoring the continued importance of solar energy in the United States’ renewable energy landscape.
