Q2 2024 in Numbers - US Solar Market
The Solar Energy Industries Associated (SEIA) ran their quarterly report, revealing that the US solar market installed a record 9.4 GW of solar capacity in Q2 2024.
This was mainly driven by the utility-scale segment, which rose by 59% year-on-year to install 7.6 GW in the quarter. There was also a 23% decline from Q1, but the Q1 figures were inflated due to the launching of various delayed projects from 2023.
An extra 1.1 GW of residential solar was installed in Q2, down 37% year-on-year and down 10% from Q1. This has been driven by California's transition to net billing, as well as interest rates remaining high.
427 MW of commercial solar was installed in Q2, up by 6% year-on-year and down by 5% on Q1.
The community solar segment saw an extra 270 MW, a fall of 12% from Q1 as well as year-on-year.
Diving into the Drivers
The residential solar market has been experiencing a downturn in 2024, with weaker sales than expected caused by high interest rates, and a weaker seasonal uptick in summer demand. The policy framework in California has also reduced the incentive for investing in solar, and pushed back projections for the market as a whole. Whilst a recovery is expected in 2025, this may be stymied slightly by the impact of the new AV/CVD tariffs placed on Southeast Asian trading partners.
In the commercial solar market, growth in Q2 was driven by strong volumes of installations in California and Illinois, combining to total 26% of all commercial capacity installed in H1. States such as Maine, Texas and Georgia struggled, and organisations are slowing to commit to projects as they navigate potential risks amid AV/CVD. The tariffs are expected to impact the commercial market much more, and the commercial market will also feel the hit of California's transition to net billing in 2025.
Community solar has declined, particularly in states like Massachusetts and Maine, with some momentum picked up in new emerging states. As the markets in mature states saturate, the success of emerging programs and the successful implementation of state funding are both key to further growth. As it stands, we haven't seen the markets in emerging states grow fast enough to supplant the previous growth from bigger markets. Implementation plans for the $7 billion Solar for All program, from the Environmental Protection Agency, promise a boost for projects across the country, and are set to be finalised by the end of the year.
Meanwhile, utility-scale solar has hit a quarterly record in Q2 2024. Installations kept up with procurement to leave a contracted pipeline of 96 GW, and AV/CVD is expected to have a negligible impact on projected growth due to existing inventories and domestic production. The constraints around the availability of both labour and high-voltage equipment, as well as general interconnection delays still run the risk of pushing back projects going into 2025.
The Consequences
We have seen many residential installers shift their focus away from California, and the evidence above has shown the significance of this. In the midst of this, Texas has emerged as the clear frontrunner in the market, with 5.5 GW installed in H1 2024 -- nearly double as much as second-placed Florida at 2.9 GW.
Whilst there are gains to be made in commercial and community solar, the market is bearish whilst it evaluates the risks of the new tariffs and awaits for new funding, respectively.
The outlook for utility-scale, in itself, is optimistic. The US economy has its own wider challenges to continue to support its growth in powering the nation.
