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What’s Holding The U.S. Solar Boom Back?

U.S. solar farm developers are preparing for years of strong growth but federal government policies are holding this growth back for now, a new report from the Solar Energy Industries Association has said.

According to the report, solar system installations this year will fall to 15.7 GW, which is the lowest since 2019 because of the government’s investigation into Chinese tariff evasion and because of the Uyghur Forced Labor Prevention Act, which came into effect in June.

While new tariffs on imported solar panels have been paused as a way of supporting the industry, the UFLPA has dealt a blow to the industry’s ambitions for the next year or so by limiting the supply of cheap panels produced in China.

Even so, the outlook remains rosy, helped significantly by the Inflation Reduction Act passed by Congress last month.

“The Inflation Reduction Act has given the solar industry the most long-term certainty it has ever had,” Wood Mackenzie principal analyst and lead author of the SEIA report said.

“Ten years of investment tax credits stands in stark contrast to the one-, two-, or five-year extensions that the industry has experienced in the last decade. It’s not an overstatement to say that the IRA will lead to a new era for the U.S. solar industry.”

This year, solar installations accounted for 39 percent of all new generation capacity additions in the United States in the first half of the year and demand for solar remains robust. Currently, solar accounts for 4.5 percent of the U.S. energy mix.

According to the SEIA report, the country’s solar market will expand by 40 percent over baseline projections by 2027 thanks o the stipulations in the IRA. This is equal to 62 GW of capacity. Thanks to this additional stimulus, utility-scale solar in the U.S. is seen adding some 162 GW over the next five years, with total solar reaching 336 GW by 2027.

By Irina Slav for Oilprice.com

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