U.S. Gains Ground As Solar Energy Provider.
For much of recent history, the U.S. has played second fiddle in solar power generation. Countries in Asia and Europe prioritized the transition to a renewables-based energy grid over the last decade, while the U.S. dithered on its response—one moment stressing the need to go green, then backtracking its commitment the next.
That all changed roughly two years ago, when the Biden administration signed the Inflation Reduction Act (IRA) into law. While voters tended to herald or harangue the legislation along party lines, the IRA’s true target audience—corporations—took a pragmatic approach. Businesses saw the passage of the IRA as a make-or-break moment, when risks to entering the solar market were reduced and rewards were maximized.
Since that time, the U.S. solar market has experienced a historic ramp-up. What does the industry’s next phase of development mean for the U.S. economy and the global solar movement? Find out in this month’s issue of Bytes & Insights.
Sun Shines on U.S. Solar Industry Growth
If the seeds of a nationwide solar industry had been planted prior to 2022, the passage of the Inflation Reduction Act (IRA) that August was the catalyst for their germination. This landmark legislation removed roadblocks and provided resources at every level of the industry’s development, signaling a receptive corporate industrial environment with grants and tax incentives that triggered a race among foreign and domestic investors.
Nearly two years later, the fruits of this legislation lie in concrete and steel on project sites across the country. The Solar Energy Industries Association’s (SEIA) Major Projects List currently shows 6,830 major solar projects (those with capacity of 1 MW and above) in the U.S., representing nearly 234 GW of capacity. Projects currently in operation boast 127 GW of that capacity, with the remaining 107 GW slated for projects either under construction or in development.
From the emergence of Texas and Florida as industry leaders to Georgia’s transformation into a new seat of power, solar energy in the U.S. is no longer just a Californian’s game. Domestic and foreign investors are intent to scale ever higher in an unsaturated market, while state and local officials are eager to offer major financial incentives for a chance bring prosperity to their communities.
Photovoltaic (PV) solar accounted for 46% of all new U.S. electric generation capacity in 2022, rising to 53% in 2023. These are encouraging figures, but not particularly surprising given recent policy actions. Foreign direct investment (FDI) has constituted a large share of the industry’s growth, with solar companies from South Korea, India, Switzerland, and Canada all commencing large-scale projects in the U.S in 2023. The U.S. has been a primary recipient of such large-scale projects thanks to its aggressive corporate incentives, strong labor force, and large consumer market.
SEIA predicts that the total installed solar capacity for the U.S. will quadruple from its current levels by 2030. In just six years, solar will be the world’s predominant energy source. How’s that for a sunny outlook?
Byte: The numbers don’t lie: solar is on track to become the world’s No. 1 power source. After a shaky start out of the gate, the U.S. is poised to become the frontrunner for this global movement.
Click here to learn more about Gray's role in helping to build the U.S. solar and other advanced tech industries.
What Makes Solar Worth the Investment?
The advantages of solar energy are almost too many to list: 1) an interminable power source; 2) delivered directly without primary extraction, transportation, or refinement costs; 3) operated long-term with minimal maintenance; 4) converted and consumed without the creation or release of harmful byproducts; and 5) accessible on any scale, from a single home to an entire city.
Yet that doesn’t mean that building the domestic solar industry comes without cost or impediment to success. Cell and module production still require finite natural resources that must be harvested, shipped, and processed—all of which carry environmental and human costs. Some materials are scarce or difficult to produce, while others involve toxic waste. Yet these challenges are in no way unique to solar; fossil fuel operations carry all these risks and more, and even the average food processing facility faces similar concerns. Regardless of sector, industrial operations impact the planet in positive and negative ways, and corporations have a crucial responsibility to maintain a safe balance and continuously improve.
The few current shortcomings exclusive to the solar industry stem from underdeveloped technology: higher costs, lower conversion efficiency, overreliance on rare elements, and insufficient energy storage. The good news is that technological hurdles can be—and have always been—cleared through research and development. In the case of clean energy such as solar, direct carbon emissions can be eliminated entirely. The same can’t be said for fossil fuels or petrochemicals, whose industries are built upon the fundamental science of extracting, processing, burning, and disposing of hydrocarbons. While these industries can employ systems to refine hydrocarbons more efficiently or capture emissions more effectively, they can never leverage carbon-based fuel technology to the point of zero carbon waste.
By contrast, the more work that goes into solar development, the more that the industry’s current hardware disadvantages can be transformed into strengths:
As module production capacity ramped up in 2023, the costs of monofacial and bifacial photovoltaic modules decreased by 26% and 31%, respectively.
Perovskite cells, an emerging solar technology, are nearing full-scale commercialization and will reduce material requirements and production waste while increasing efficiency by as much as 50%.
Developments in electrical, chemical, and thermal storage are broadening the applications of solar batteries and improving their capacity, lifespan, and stability, which has led to an increase in solar-plus-storage projects.
Byte: Solar investors stand to win big in the energy renaissance. When it comes to their rollout in the marketplace, solar technologies can be categorized in one of two ways: those that have a competitive edge, and those with the potential for an even greater edge.
What’s Next for Solar?
With lower startup costs than ever, solar manufacturers understand that the days of “wait and see” are over. But with the imperative to build a new and rapidly developing industry comes a special set of challenges and opportunities.
Sales for Today or Innovation for Tomorrow?
Manufacturers across the solar energy industry must perform a difficult balancing act: leveraging demand for technologies currently in production while developing more effective ones for the future. Pursuing promise is a costly endeavor, especially considering that capital expenses have already led many solar manufacturers to explore creative financing options. Still, improvements in efficiency applied on an industrial scale can pay massive dividends over time. This can be achieved through incremental gains in existing technologies or via breakthrough advances in novel technologies. Both routes to innovation offer higher profit margins and market share. Such mouthwatering advantages incentivize manufacturers to bite the bullet and invest in developing new technologies.
Yet the challenge is more nuanced than it may first appear. The rapid deployment of solar in the U.S. has put enormous pressure on solar manufacturers, especially foreign companies, to invest kingly sums in establishing high-capacity operations that require building cutting-edge facilities from the ground up. Meanwhile, these manufacturers have an imperative to keep production costs low, which tried-and-true technologies do better than novel ones. Low production costs allow for lower consumer prices, which improve a company’s competitive advantage, but only in the short term: hyper-focusing on existing technologies at the exclusion of modernization is a recipe for falling behind in the marketplace.
History is replete with examples of seemingly invincible industry giants that balked at innovation and fell into obscurity (see: Blackberry, Blockbuster, MySpace, PanAm, Sears, and many more). For a more direct comparison within the energy sector, consider the fate of the coal industry. Since 2016, five of the top six coal companies have declared for bankruptcy, while last year, renewable energy sources accounted for the majority of all new generation capacity.
One disruptive development on the solar industry horizon is the perovskite cell. Perovskites are semiconductor materials that absorb a wider range of wavelengths from solar energy than traditional silicon-based cells, which makes them more efficient at converting this energy into electricity. Because they involve less complex processes, they cost less to produce, which will presumably lead to lower costs for end-users. And because perovskites require less material to manufacture, the finished modules weigh less and can be used in a greater variety of applications. Lately, a great deal of research has gone into creating tandem perovskite-silicon cells that can leverage the benefits of perovskite technology while integrating into proven silicon modules. While concerns remain about their durability and longevity in a natural environment, a commercially viable perovskite solar cell would make an immediate splash in the market—and we may be very close to such a breakthrough.
If You Build It, They Will Come
As the solar industry grows, a complete network of partner industries is growing around it. With new module manufacturing facilities comes the need for more suppliers of silicon, glass, metals, and industrial equipment. With added capacity comes more product on the market and the need for more solar service providers with installers, fleet vehicles, and personnel to sell and distribute that product. The buildup of this complete manufacturing ecosystem will only accelerate as the U.S. begins to bring the complete solar value chain stateside (currently, manufacturers import solar cells and other vital components and assemble them in the U.S.). Already, Qcells USA is preparing to open the country’s first complete solar manufacturing operation. The plant in Cartersville, GA, will involve end-to-end manufacturing, purifying quartz into pure silicon ingots, cutting and polishing extremely thin wafers, etching and coating cells, and finally, assembling finished modules.
Byte: Rapid advances in technology and aggressive domestic investment demonstrate that tomorrow’s energy leaders are being forged today in the U.S. solar industry. Having overcome its early inertia, domestic solar is turning momentum into next-generation innovation.
Learn more about the industry’s next steps in our new article on gray.com.
