U.S. utility solar market has grown 34% since Q2 2023
Developers continued to take advantage of the Inflation Reduction Act in the second quarter as they added utility-scale solar projects in the United States at a record pace.
There was 7,369 MW of solar installed in the quarter, a 49% increase from the first quarter, according to data from S&P Global Market Intelligence. U.S. installed solar capacity has grown 34% since the second quarter of 2023, with more than 110,000 MW of projects now operating.
Developers plan to add more than 40,292 MW of solar this year, with 3,727 MW announced, 14,548 MW in early development, 1,473 MW in advanced development and 20,543 MW under construction. There is nearly 233,000 MW additional solar capacity in development in the U.S. through 2028, according to Market Intelligence data.
However, permitting and interconnection challenges continue to remain obstacles for projects.
“There is a situation in America where solar, all renewable energy, but solar especially is difficult to develop, especially small solar fields are even more difficult. You need the economies of scale,” Doral Renewables CEO Nick Cohen told S&P Global Commodity Insights. Cohen added that as a result of slow interconnections, “many projects are getting built … at the same time, demand has never been stronger … so you have a situation where there’s not enough supply and there’s skyrocketing demand.”
Doral Renewables has 1,300 MW of solar under construction in the US at a multiphase project in Indiana. Cohen added that tariffs have also caused uncertainty, delays and price escalations.
“There’s a lot of cost escalation taking place because of the geopolitical tensions,” Cohen said. “We’re seeing increased power purchase agreement prices. And then ultimately, that just filters down to the ratepayer.”
As a result, power prices are going up and there’s been a consolidation of developers, he said. Cohen added that the tariffs forced Doral Renewables, which focuses development on agricultural land, to switch to less-efficient panels that require more land.
Woody Rubin, chief development officer for AES Corp.’s US renewables business, told S&P Global Commodity Insights that managing its supply chain is a competitive advantage.
“We have essentially all of our major equipment in country for projects coming online this year and expect to have most of the solar panels we need through 2026 before any tariffs could potentially apply,” Rubin said. “We’ve navigated these currents of uncertainty before, adapting our supply chain, and we find ways to keep our commitments to our projects and our customers.”
While the US continues to add more solar, it needs an additional 61 GW of the resource to meet its goals, according to a report from consulting firm McKinsey & Co.
However, “the nature of solar installation is such that the pipelines could indeed materialize in time,” McKinsey added.
The 10 largest projects completed in the second quarter of 2024 totaled 3,062 MW added; seven of the projects are in Texas.
Hecate Energy and its investor, Spanish oil company Repsol SA, completed two projects, the 570-MW Hecate Energy Frye Solar Project in Texas and the 400-MW Highland Solar Farm in Ohio. Amazon.com Inc. has contracted for most of the output of the Frye plant.
Ørsted A/S, better known as an offshore wind developer, completed two solar projects in the second quarter, the 300-MW Eleven Mile Solar Center in Arizona and the 250-MW Sparta Solar Plant (Helena Energy Center) in Texas. Ørsted secured $680 million in tax equity financing from J.P. Morgan for these two solar-plus-storage projects. Meta Platforms Inc. will buy the output from the Eleven Mile Solar Center.
The two announced projects in the second quarter would add a little over 200 MW of additional capacity.
There are more than 300 projects in advanced development or under construction, according to Market Intelligence data, with the largest amount in Texas.
Market Intelligence considers a project to be under construction when building activity has begun; site preparation does not qualify. Projects in advanced development must meet two of five criteria: financing is in place; power purchase agreements are signed; equipment is secured; required permits are approved; or a contractor has signed on to the project. A project is in early development after permitting begins. An announced project must have a listing in an interconnection queue with an accompanying public announcement or permitting action.
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