Residential Installations Decline in 2023
The U.S. residential solar industry struggled last year, seeing declines in installations by about 26 percent in 2023. Much of this decline was due to changes in the net metering policy in California, which reduced compensation for those exporting power to the grid by about 75 percent. As a result, residential installations in California dropped by over 40 percent.
In 2023, California accounted for 25 percent of all residential solar installed nationwide.
Other factors leading to the nationwide decline were higher interest rates as well as increased tariffs which added to the cost of installing a system.
Residential solar only makes up about 22 percent of the overall solar market. Utility scale solar accounts for 72 percent of all solar installations with a dramatic 44 percent growth rate in 2023.
Renewables Continue to Surpass Fossil Fuels as a New Generating Supply
Overall, solar made up 64 percent of new generating capacity added to the grid last year. When you add storage to the mix, solar plus storage accounted for 84 percent of all new generating sources added to the grid in 2024.
Fossil fuels on the other hand, specifically natural gas, accounted for only about 4 percent of those additions to the grid.
The Energy Information Administration (EIA) anticipates that 63 gigawatts of new capacity will be added to the grid this year and 81 percent of that will be from solar plus storage.
This represents a 30 percent increase over the amount that was added in 2024.
Higher Electricity Costs Anticipated
According to a new study published by the Clean Energy Buyers Association, households and businesses expect to pay more for electricity over the next decade if Congress repeals the tax provisions for clean energy in the Inflation Reduction Act (IRA).
By 2029, full repeal of the investment in production tax credits will increase electricity prices by about 7.3 percent for residential customers, 10.6 percent for commercial and industrial users or collectively 9.2 percent across all sectors.
Electricity demand is expected to increase by about 50 percent over the next decade coming from the addition of data centers, the on-shoring of manufacturing, industrial processes and the electrification of the automobile.
Full repeal of the IRA tax credits could reduce wind and solar deployments by about 50 percent by 2035 and echoing Economics 101, the report says that if you have increased demand and a reduction in the anticipated supply, then prices will go up.
Off-Grid Systems Increasing
The US demand for residential off-grid systems is rising faster than on-grid systems. In fact, compounded year-on-year, off-grid systems are growing between 7 and 10 percent while on-grid systems are growing at a rate of about 6 percent. This according to a study by the Thompson Endowment as well as the Natural Sciences and Engineering Resource Council of Canada.
A large part of this off-grid market is indeed truly off-grid, due to no grid connection available.
The study found that increasing rise in utility costs are making the disconnection from the grid a financially attractive option.
In fact, five states identified in the report: Hawaii, California, Massachusetts, Connecticut and New Hampshire, were found as prime candidates for the conversion to off-grid installations. Some of these locations document about a six-year payback for this transition..
The surge in adding storage to homes is also making the transition to off-grid more attractive.
In California, for example, 60 percent of all homes installed in 2024 incorporated storage. The leap from solar plus storage to a complete off-grid commissioning is actually quite simple.
State Policies Evaluated in Annual Scorecard
Each year, the Institute for Local Self-Reliance evaluates state policies in the adoption of renewable energy and then produces a community power scorecard.
The non-profit group assesses 18 different categories from net metering, ease of interconnection, third-party ownership and other criteria, then issues a letter grade.
In 2024, of the 50 states and Washington, D.C., only one state received an above average grade, 13 got a C average, 14 received Ds and 23 states received a failing grade of an F.
The states scoring highest for policy friendly adoption of solar applications were Illinois, Oregon, Colorado, New York and California. Those states least friendly to the adoption of renewable energy were Alabama, South Dakota, Tennessee, Wyoming and Nebraska
