- The Inflation Reduction Act has led to a fivefold increase in US solar panel production capacity, with solar installations making up 99.6% of new energy projects in August 2024.
- Despite this growth, challenges such as underdeveloped supply chains and higher domestic production costs threaten the long-term sustainability of US solar manufacturing.
The Inflation Reduction Act (IRA), adopted in August 2022, dramatically increased US solar energy growth. Solar panel production capacity has quintupled, and solar installations now dominate the energy sector. According to the Federal Energy Regulatory Commission (FERC), solar accounted for 99.6% of new energy installations in August 2024.
The US boasts over 45 gigawatts (GW) of solar module manufacturing capacity. This expansion will meet a significant portion of national demand by 2025. As the Solar Energy Industries Association reported, investors have directed $34 billion toward solar factories, generating nearly 40,000 jobs. Companies like First Solar and Hanwha Q Cells USA have opened new plants, boosting their production capabilities.
In terms of capacity additions, solar energy leads the way in the U.S. From January to August 2024, solar installations added 16,546 megawatts (MW). S&P Global Commodity Insights projects that solar could add another 36 GW of front-of-meter capacity this year, ensuring its dominance through the decade.
Despite this growth, challenges remain. Key segments of the solar supply chain in the US still lack development. The nation struggles to produce silicon ingots, wafers, and crystalline cells, essential for solar panel manufacturing. This shortage risks creating production bottlenecks, forcing companies to import these components from Asia, primarily from China and South Korea.
Domestic production costs remain higher than imports, raising concerns about the long-term viability of US solar factories. Some industry stakeholders advocate for tariffs on foreign solar products to protect domestic manufacturing. However, others warn that such tariffs could slow sector growth.
The political landscape will also play a critical role in the future of US solar production. The outcomes of the upcoming elections may affect policies that support domestic production and import tariffs. As the political climate shifts, companies like First Solar and Qcells continue to invest heavily in the US, reinforcing the country’s renewable energy position.
FERC projects that 2027 solar capacity could reach 91 GW, representing about 15% of the nation’s total installed capacity. This growth coincides with the gradual shutdown of coal and natural gas plants. Renewable energy sources, particularly solar and wind, will likely comprise over 36% of the US energy mix in the coming years.
The momentum created by the IRA has positioned the US as a leader in solar energy production. The combination of financial incentives and job creation revitalises the sector. However, addressing the challenges of supply chain and production costs remains crucial for sustainable growth.
Industry experts emphasise the need for strategic investments in domestic production capabilities. Building a robust supply chain within the US will help reduce reliance on imports and lower production costs. This shift proves vital for long-term sustainability and competitiveness.
As the solar sector evolves, continued investment and innovation will prove essential. The push for renewable energy grows stronger every day, and the future of US solar production looks promising. With political support and strategic planning, the country can navigate current challenges and maintain its position as a global leader in renewable energy.