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Solar Industry Awaits Numerous Challenges as IRA Falls Short of Being a Panacea

published: 2023-02-15 9:30

US President Joe Biden signed the most ambitious climate act in the history of the country during 2022 through the Inflation Reduction Act (IRA) in the hope of accelerating renewable energy development, though experts have pointed out that it would take another 2-3 years before seeing a sizable growth in solar power.

The US will invest about US$370 billion in clean energy, but the IRA would not resolve all challenges after all as the renewable energy industry is currently tackling issues that include the tumultuous supply chain, strained trade relationships, and postponed grid connection, while the regulations that are on the verge of announcement can also restrict installed capacity of solar power.

The US solar industry is expected to surpass in growth compared to that of 2022 and 2021. Wood Mackenzie and the SEIA are estimating an increase of roughly 27.9GW in solar installations for the US this year, which is higher than 18.6GW and 24.1GW respectively projected for 2022 and 2021, and are forecasting a much larger growth for 2024, 2025, and 2026.

Abigail Ross Hopper, CEO of SEIA, commented that local potentials are yet to be exerted, and that the government would be able to resolve some existing challenges.

These challenges include how the US is banning partial imports of solar products from Xinjiang due to suspicions on forced labor, however, more than 50% of global multi polysilicon supply is generated by Xinjiang. According to statistics, the US Customs has so far detained more than 1GW of imported solar modules.

Solar developers, even after successfully obtaining solar panels and establishing power plants, would have to wait for a period of time before receiving licenses for grid connection. Pol Lezcano, solar analyst at BloombergNEF, commented that the IRA, despite providing momentum for the development of solar economy by offering significant subsidization, serves zero functions if corresponding products cannot be sold.

California will also reduce subsidization on residential solar in the future. The measure is expected to come into effect starting from April, and could possibly decelerate the level of rooftop PV installations for the largest state of the US.

The industry, despite facing the aforementioned challenges, remains relatively optimistic. SEIA estimates an average YoY growth of 21% for solar power between 2023 and 2027.

The IRA also significantly encourages investment in the clean energy production chain of the US, which helps to lower the dependency on products imported from Asia for the country. Affordable solar modules are convincing some conservative regions of the US to turn to solar power, whereas the increasingly popular battery energy storage systems that offer 24-7 power supply are transforming renewable energy into a non-intermittent energy and offsetting advantages of natural gas in comparison with renewable energy.

 (Cover photo source: pixabay)

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