The U.S. installed 5 gigawatts (GWdc) of solar PV capacity in Q1 2021 according to a recent report. The U.S. Solar Market Insight Q2 2021 report from Solar Energy Industries Association (SEIA) and Wood Mackenzie also noted that the U.S. solar market surpassed 100 gigawatts (GWdc) of installed electric generating capacity, reaching 102.8 GWdc. This capacity is sufficient to power 18.6 million American homes.
In addition, solar accounted for 58% of all new electricity-generating capacity added in the U.S. in Q1, with wind making up the majority of the remaining capacity.
2021 Q1 solar additions represent a new Q1 record and a 46% increase over Q1 2020. Utility-scale projects account for a majority of these installations, with a Q1 record of 3.6 GW. Residential solar sales also continued to grow, with 905 megawatts (MW) added in Q1 2021, an 11% increase over the same period last year. The commercial sector grew 19% over the same period of 2020, while community solar declined 15%.
According to Wood Mackenzie, the solar Investment Tax Credit (ITC) will continue to be highly influential and will drive record growth and investment over the next three years. Their forecast calls for 160 GW of solar to be installed from 2021 to 2026, bringing total installed PV solar capacity to more than 250 GW by the end of 2026.
Rising Costs May Impact Future Installation Rates
The report also notes rising costs in the solar industry as a potential limitation on growth. While average solar system prices remained relatively stable over the last six months, certain key inputs, including polysilicon, steel, aluminum, semiconductor chips, copper and other metals, are facing supply constraints. Though not yet factored into system costs, it is possible that these components cause price increases later this year.
Commercial Solar Sees Substantial Room For Growth
The commercial solar market, which consists of on-site solar installations for businesses, non-profits and governments, has grown unevenly in recent years. The report cites evolving capital markets and financing tools as limiting growth. However, as a wider swath of business types gain access to financing, growth will persist in the commercial segment. Meanwhile, sustained adoption by large companies with aggressive clean energy goals will help push the segment to record levels in 2021. With less than 1% of commercial electricity demand served by on-site solar, there remains significant opportunity for growth in this segment.