Solar manufacturing capacity has quadrupled following Democratic climate bill

Manufacturing capacity for solar panels has increased nearly fourfold since the Democrats’ climate law passed in 2022, a new report shows, as competition with China for production escalates.

Manufacturing capacity now exceeds 31 gigawatts, according to a joint report released by the Solar Energy Industries Association and Wood Mackenzie analyzing the industry’s third quarter.

Two years after the Inflation Reduction Act was passed by Democrats and signed by President Joe Biden, the solar industry has added 75 gigawatts of new capacity to the grid — representing 36% of all solar capacity.

The fast growth of the solar industry comes as solar and wind are expected to lead the growth of power generation for the next two years and as the Biden administration has prioritized domestically producing solar to compete with Chinese solar companies. However, America’s manufacturing capacity continues to lag significantly behind China, with the communist state’s capacity set to reach 1,100 GW per year by the end of 2024 . Furthermore, a second Trump administration could throw a wrench in further solar investment as the former president has pledged to halt all spending under the IRA.

“The solar and storage industry is turning federal clean energy policies into action by rapidly creating jobs and powering economic growth in all 50 states, particularly in battleground states like Arizona, Nevada and Georgia,” SEIA President and CEO Abigail Ross Hopper said in a written statement. “We are now manufacturing historic amounts of solar energy in America, and soon, we will have enough domestic module production to supply nearly all U.S. demand for years to come.”

Residential solar, however, has seen a continued decline, with only 1.1 gigawatts installed in the second quarter — a decrease of 10% quarter-over-quarter and 37% year-over-year. California is driving this decline due to policy changes in the state, along with nationally high interest rates.

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SEIA’s five-year outlook projects the industry will continue to install at least 40 gigawatts per year, for 2025 and beyond. Installations will continue to grow on a 4% average over the next several years, with solar capacity expected to double to 440 gigawatts by 2029. However, installations are expected to decline by 4% this year, driven by a 2% decline in utility-scale projects and a 19% decline in the residential sectors.

Utility-scale solar, however, will be limited by a lack of labor availability, high-voltage equipment constraints, and interconnection delays.