America's Solar Vision and Opportunity
Written by Michelle Davies, Head of Global Solar at Wood Mackenzie
The growth trajectory of the US solar industry is remarkably strong. According to our latest projections, the industry will regularly install 40 to 50 gigawatts (GW) of capacity over the next few years. This is a significant achievement considering that the maximum installed capacity of the industry will reach 25 GW by 2021. Average annual growth over the next decade will be 11%. And the installed project base will increase almost five-fold, from 150 GW today to 700 GW by 2033.
This growth represents a large capital investment. Today's solar energy market is about $45 billion in annual capital expenditures. By 2033, this figure will double to $72 billion a year.
As the solar industry continues to grow in the US, it provides the largest share of the country's electricity generation capacity. Utility-scale solar power will account for 40% of US generating capacity by 2050, according to Wood Mackenzie's analysis, and that's not counting off-meter solar panels.
Great progress brings problems
But high growth rates also bring problems. The solar industry has gone through quite a few hardships (hence the solar rollercoaster), but while the industry is growing, it is not slowing down.
The most urgent task today is to connect the project to the distribution network. The time required to connect a project to the network has increased to four years from the moment it was put on the waiting list for connection. For comparison: it was two years ago, ten years ago. In the last decade, capacity has become limited due to the construction of new facilities and very few new transmission lines.
There are also political challenges. Distributed solar projects typically face net metering issues (i.e. balancing retail solar production rates) as market penetration increases. Most states with a large number of distributed solar systems (eg Hawaii, California, Arizona and Nevada) have phased out net energy metering and changed distributed solar system compensation.
But challenges open up new investment opportunities
Given these challenges, there are many opportunities for investment in solar projects that look different than they do today.
The best and, perhaps, the most obvious option today is to combine solar projects with storage more often. This will help limit damage and increase the scarcity of cheap solar energy exports (so-called waste) on heavily loaded grids. About half of the proposed utility-scale solar projects involve battery storage; This is good, but could be higher. And in diffused sunlight, they are much less. In most markets, less than 10% of solar projects are equipped with batteries. This allows you to build very high quality solar projects for the network.
There are many other possibilities: off-grid inverters, greater use of energy management systems in homes and buildings, low-cost meters to reach the mass market; The list is long. And we need energy transfer.
The solar industry is one of the most important for the United States as it is the driving force behind the energy transition. Later this month, I will be speaking at the Wood Mackenzie Energy and Solar Storage Summit in San Francisco. The event will highlight the latest growth forecasts, growth challenges and opportunities across the industry. If you would like to join us, register here .
