August 12, 2022

Andrew Ocalliham | EyeEm | Getty Images

The United States now has over 100 gigawatts of photovoltaic capacity, according to a new report, although rising costs could pose challenges for the industry.

The numbers come from the latest US Solar Market Insight report released Tuesday by the Solar Energy Industries Association and Wood Mackenzie.

It found that the American solar industry installed just over 5 GW of photovoltaic capacity in the first three months of 2021. This is a record for the first quarter and 46% higher than the same period in 2020.

At the state level, Texas comes out on top with an installed capacity of more than 1.52 GW, followed by California and Florida with 563 and 525 megawatts respectively.

Looking at the bigger picture, the report finds that solar energy represented “58% of all new generation capacity” in the United States in the first quarter. Wind was responsible for “most of the rest”.

While the US solar industry has now exceeded 100 GW capacity, other markets have already reached this milestone. Towards the end of 2020, SolarPower Europe reported a capacity of more than 137 GW in the European Union.

The above numbers refer to DC or DC ratings as opposed to AC. Capacity is the maximum amount systems can produce, not necessarily what they are currently producing, while photovoltaics refers to a way to convert light from the sun directly into electricity.

Future challenges

While the number of installations in the US seems encouraging, the sector faces some potential headwinds going forward.

“In the last few quarters,” the report’s summary says, “critical components for solar systems – polysilicon, steel, aluminum, semiconductor chips, copper and other metals – have become increasingly scarce.

It added that growing demand for solar energy “combined with pandemic-induced macroeconomic realities” – which include the availability of microchips and increased shipping costs – has led to rising raw material prices and delayed deliveries.

“There is a lag between commodity prices and subsequent solar system prices,” said Michelle Davis, lead analyst at Wood Mackenzie Power & Renewables and lead author of the report.

“But there is no doubt that this is having an impact on the solar industry,” she added. “Installers are dealing with current equipment bottlenecks and have to decide whether to renegotiate contracts.”

While the proliferation of solar panels will likely be welcome news for renewable energy proponents, any move away from fossil fuels will present a significant challenge that will require major changes.

In the US, preliminary figures from the US Energy Information Administration show that natural gas and coal accounted for 40.3% and 19.3% of utility-scale electricity generation in 2020, respectively.