Trade and supply chain barriers delay impact of historic clean energy law

The U.S. added 4.6 gigawatts (GW) of new solar capacity in Q3 2022, a 17% decrease from the same quarter last year as trade barriers and ongoing supply chain constraints continue to slow America’s clean energy progress. These disruptions will cause a 23% decline in solar installations this year compared to 2021, according to the U.S. Solar Market Insight Q4 2022 report released today by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, a Verisk business.

Wood Mackenzie said detainments under the Uyghur Forced Labor Prevention Act (UFLPA) are depressing near-term solar installation forecasts and delaying the impact of the Inflation Reduction Act (IRA). The U.S. Department of Commerce’s recent decision to apply anti-circumvention tariffs on solar products from Southeast Asia presents downside risk to future solar deployment.

“America’s clean energy economy hindered by its own trade actions,” said SEIA president and CEO Abigail Ross Hopper. “The solar and storage industry is acting decisively to build an ethical supply chain, but unnecessary supply bottlenecks and trade restrictions are preventing manufacturers from getting the equipment they need to invest in U.S. facilities. In the aftermath of the Inflation Reduction Act (IRA), we cannot afford to waste time tinkering with trade laws as the climate threat looms.”

As a result of supply constraints, the utility-scale, commercial and community solar markets all experienced quarter-over-quarter declines in Q3. The residential solar segment is less directly impacted by existing trade issues and saw 1.57 GW of new installations, marking a 43% increase over Q3 2021.

“Installations this year were significantly depressed due to supply chain constraints” said Michelle Davis, principal analyst and lead author of the report. “It has proven more difficult and time-consuming to provide the proper evidence to comply with the UFLPA, further delaying equipment delivery to the U.S.”

Forecasts from Wood Mackenzie find that the UFLPA will limit solar deployment through 2023 and mute the impact of the IRA in the near term. The report forecasts the utility-scale solar market to add 10.3 GW of new capacity in 2022, representing a 40% drop from 2021 volumes. By 2024, IRA-fueled growth will begin in earnest, with annual solar growth averaging 21% between 2023-2027.

Even as supply chain constraints slowed the market, solar accounted for 45% of all new electric generating capacity additions through Q3 2022, the most of any electricity source.

Learn more at seia.org/smi.