Community solar installations dipped last year but are expected to grow rapidly over the next five years, according to a new report from Wood Mackenzie.
Community solar installed capacity declined 16 percent in 2022 compared with last year, according to the report, US community solar market outlook: H1 2023.
Last year’s drop in community solar installations was primarily driven by interconnection delays that hindered growth in key markets such as Massachusetts, Maine, and Maryland, the report’s authors said, adding that industry wide supply chain constraints pushed project timelines into 2023.
Despite last year’s slow down, the community solar market is forecast to grow 118 percent with at least 6 gigawatts of direct current capacity expected to come online in existing markets between 2023 and 2027, according to the report, which was done in collaboration with the Coalition for Community Solar Access.
If a “conservative forecast” of new market opportunities is included Wood Mackenzie estimates that 11.5 GW of community solar could be installed by 2027.
CCSA’s new target of 30 GW of community solar by 2030, announced in January, will require an acceleration of installed capacity in existing markets and continued establishment of new state markets, the report said.
“Any upside to our existing forecast will require strong policy and market reforms that release pipeline backlogs in existing markets, as well as additional capacity from new state markets,” Caitlin Connelly, research analyst at Wood Mackenzie, said in a statement. “The newly passed state-wide program in California, for example, has the potential to yield a significant number of megawatts in the coming years.”
New state markets will provide upside to the national forecast starting in 2024, the report said. Wood Mackenzie’s preliminary forecasts call for a 605-megawatt (MW) boost by 2027 from potential new state markets, including Michigan, Ohio, Wisconsin, Pennsylvania, and Washington.
“The Inflation Reduction Act (IRA) is cause for optimism,” Connelly said. “Community solar developers are well positioned to take advantage of the new and extended investment tax credits (ITC) once guidance is released in 2023, with many developers interested in qualifying projects for the low-to-moderate income and domestic content adders.”
The report also found that as project portfolios grow, community solar developers are increasingly outsourcing subscriber acquisition and management services to third-party companies. The top three subscriber companies now manage over 37 percent of the total market, according to the report.
“The landscape for subscriber companies is becoming more competitive and complex,” Connelly said. “Developers seek partners that can successfully subscribe projects, form trusting relationships with subscribers, and manage these relationships throughout the lifetime of the project or program.”