Solar Most of the U.S. economy took a big hit in 2020 as the coronavirus pandemic forced widespread closures. For the U.S. solar industry, it’s been a different story. Solar installations hit a record high with 19.2 gigawatts of new capacity added in 2020, according to the Solar Energy Industries Association (SEIA).1 This represents a 43% year over year increase.
Over 8 gigawatts of capacity were added in the fourth quarter. The quarterly record reflects more capacity than was added throughout 2015, when 7.5 gigawatts of solar capacity came online. While residential solar installations slowed in the second quarter; they hit records in terms of sales for the second half of the year, as a demand for home improvement projects increased. In total, solar accounted for 43% of new electricity generating capacity in the U.S. during 2020 (including an additional 65% in utility solar capacity).2
Signs of Growth on the Global Solar Market
About 97.2 gigawatts of solar capacity is currently online in the U.S., the likes of which could power approx.17.7 million homes, according to SEIA report estimates. Worldwide, capacity for renewable electricity rose by 45% in 2020, to a total of 280 gigawatts. This represents the largest year-on-year increase since 1999, while 270 gigawatts are expected to be added in 2021 alone.3
After last year’s additions, a slowdown in China is expected. However, 2022 is looking promising with nearly 280 gigawatts expected to be added. The International Energy Association has revised its forecasts upwards by over 25%. Even with the pandemic and economic uncertainties, record power purchase agreements by companies and record levels of renewable capacity demanded by governments have compensated for suppressed demand.3
This trend hasn’t been limited to solar alone. Global wind capacity doubled in 2020 to 114 gigawatts. This is expected to slow down in 2021/2022 but be higher than the average for 2017-2019. China remains the largest manufacturer of both wind turbines and solar panels as well as the leading supplier of steel, glass, copper, and silicon as well. China’s dominance in supplies continues despite a major fire at a Chinese factory last year, ultimately stressing the supply chain and increasing PV module prices.
A Look to the Solar Industry’s Future
Federal tax credits, such as the investment tax credit (which was recently extended by two years) is helping drive growth. The SEIA has projected a 17% increase in solar deployment between 2021 and 2025 as a result.2 However, there are other factors in play, including a rising interest in home improvement, power outages due to extreme weather, and more attractive products from loan providers.
A proposed bill by President Joe Biden covers emissions reduction targets and improvements to infrastructure, and would likely increase demand for renewable power in the coming years. Part of this proposal calls for an emissions-free power sector by 2035. But based on various data, the SEIA report projected that the U.S. solar market, based on growth forecasts through 2030, could quadruple from its present-day levels.
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