Solar Industry Trends for 2024 and BeyondJanuary 22, 2024
As we step into a new year, the solar industry finds itself at the forefront of a transformative era. With global commitment to sustainable energy sources intensifying, the solar landscape is evolving at an unprecedented pace, bringing forth innovative technologies, policy shifts, and market trends that promise to redefine the future of renewable energy.
Explore four trends that will define the solar market in 2024, including projected growth, global supply chains, inflationary impact on energy pricing, and the rise of community solar farms.
Continued Solar Growth Despite Uncertainty
In 2023, the solar industry saw a remarkable 55% increase in new electric generating capacity, thanks to the Inflation Reduction Act and other clean energy policies encouraging new business. With total installed solar capacity now up to 161 GW, some estimates project that a 23% increase in solar capacity will bring total output to around 6.8% of all electricity in 2024. This is the first time that solar has achieved a full percentage point of growth in national electricity generation in a year.
Despite ongoing positive market growth, a more modest 10% increase is projected for 2024. Anticipated challenges, including new state policies (primarily targeted at residential solar), a shortage of transformers, elevated interest rates, and high costs of financing are predicted to slow production, with growth to resume pace in 2025.
In spite of grid capacity constraints and an economic slowdown, solar power’s future is bright. SEIA projects that by 2028, U.S. solar capacity will reach 377 GW, powering over 65 million homes. By 2050, solar will account for the largest source of generating capacity on the grid.
In short, while 2024 isn’t predicted to bring the meteoric growth seen last year, overall market trends remain positive.
Inflation and Electricity Costs
Rising prices of goods and services are projected to slow in 2024 as the Federal Reserve has reined in inflation. However, electricity costs remain higher than ever, and gasoline prices are likely to continue increasing over time. As solar has become cheaper over time, it remains one of the best alternatives to fossil fuels. Partnering with organizations through Power Purchase Agreements, or PPAs, can keep electricity bills even lower through predictable monthly payments.
Power Purchase Agreements, or PPAs, are arrangements typically made between renewable energy developers and property owners that offset a customer’s purchase of electricity from the grid. Customers only pay for the solar energy produced at a rate typically lower than the current utility rates. This ensures that the energy a business pays for is consistent over time, and typically at lower levels than costly and unknown rate hikes.
Non-renewable energy costs are unpredictable, and are likely to grow disproportionately in the coming years compared to the price of solar. PPAs provide organizations with increased operational efficiencies, stable pricing, and proof of their commitment to sustainability objectives.
Community solar has become a popular form of electricity consumption due to its ease of accessibility. Unlike traditional solar panel installations that must be housed on open property or rooftop space, community solar is designed for large-scale usage among multiple tenants. As siting issues are one of the biggest limiting factors to solar access, the rise of community solar means more people will be able to take advantage of the environmental benefits and savings this electricity provides, often lowering bills by around 10%.
Projections indicate that community solar is on the rise: with an estimated 14 GW of capacity by 2028, the industry will grow an annual average of 8% every year. Positive policy developments supporting the installation of more community solar farms across the country make this type of installation a safe bet for solar deployment.
Supply Chains and Pricing Changes
Escalating geopolitical conflict has impacted supply chains around the globe, and will continue to affect industries like solar as markets adapt to changes in real-time.
The passage of the Uyghur Forced Labor Prevention Act in 2022 led to a 16% decrease in installation volumes in the United States by restricting imports of modules featuring Xinjiang polysilicon. Given that China amounts to over 80% of global totals for polysilicon, water, cell, and module production capacity, capacity outside of the country is currently unable to fulfill the demand for these resources, leading to the US bringing overseas production of PV materials stateside. While conflict remains between the two nations, leaders from both the US and China have called for a tripling of global renewables capacity by 2030, which is certain to increase demand for solar in the United States.
According to statistics from InfoLink, annual module production capacity outside China will increase at least 78% to 270 GW by late 2024. This has led to a plummet in module pricing, with prices of polysilicon have declined 70% even as demand has increased by 20%. This has led some experts to conclude that by the end of 2024, solar module prices may approach the threshold of $0.10/W – a number many thought would be impossible until 2030 at the earliest.
While shifts in global PV production are noteworthy, solar panels have become more affordable to produce and install in the United States. Solar is currently the cheapest form of energy to manufacture, giving it a competitive advantage in the energy marketplace.
Solar Shines Through 2024 and Beyond
As we navigate the dynamic currents of 2024, the solar industry stands resilient and primed for continued evolution.
While 2024 may not replicate the meteoric growth witnessed in the previous year, the solar industry remains on an upward trajectory, promising positive market trends and sustainable advancements. The commitment to renewable energy sources is unwavering, with projections indicating a brighter, more accessible solar future. Despite geopolitical challenges impacting supply chains, the solar industry adapts, demonstrating its resilience and capacity to innovate.
Catalyze helps commercial and industrial real estate owners gain access to the benefits of renewable energy. As a full-service clean energy transition partner, Catalyze finances, installs, owns, and operates integrated solar, storage, and EV charging systems, providing a seamless transition with lucrative sustainability benefits. Contact us for more information about our services.