With the passage of the Inflation Reduction Act (IRA) in 2023, the U.S. solar industry has witnessed an unprecedented surge in installations, yielding a record-breaking 32.4 gigawatts (GW) of new electric generating capacity. The U.S. Solar Market Insight 2023 Year in Review released earlier this month by the Solar Energy Industries Association (SEIA) and Wood Mackenzie details a growth rate of 37% over the previous record set in 2021 and a 51% increase from 2022.
The commercial solar segment broke an annual record that has stood since 2017, with 1,851 MWdc installed, growing 19% over 2022. Fourth-quarter volumes in California doubled from their typical range as the commercial sector started to see the same surge of installations caused by the switch to net billing.
A milestone achievement in the renewable electricity sector, solar energy has accounted for over 50% of annual capacity additions to the grid in 2023. This marks the first time in 80 years that a renewable source has dominated such a significant proportion. Total U.S. solar capacity is projected to reach 673 GW by 2034, enough to power upwards of 100 million homes. Every solar market segment experienced a year-over-year growth in the same year. Particularly, the utility-scale sector added 22.5 GW of new capacity, and nearly 800,000 Americans had solar installations at their homes.
Solar storage accounted for 13% of residential installations and 5% of non-residential installations in 2023. As per projections, this trend is set to climb with 25% of new residential installations and 10% of non-residential installations expected to incorporate storage by the end of 2024. According to SEIA, growth-rate expectations for the commercial, community, and utility-scale segments are 19%, 15%, and 26% for 2024, respectively.
Texas led the nation with 6.5 GW of new solar installations, outpacing California for the second time in three years. Largely driven by utility-scale installations in Texas, which amounted to nearly 4 GWdc in Q4 2023 alone. Colorado and Ohio joined the ranks of the top 10 solar states in 2023, and for the first time, Wisconsin was featured on the list.
In 2023, Microsoft announced several data centers would be transitioning to renewable energy sources as part of an agreement with ENGIE Energy Marketing. This partnership capitalizes on pre-existing renewable energy agreements between Microsoft and ENGIE, propelling Microsoft towards its ambitious target of attaining 100% carbon-neutral energy every hour of the day by 2030.
Since the passage of the IRA, $240 billion has been channeled into clean energy manufacturing and infrastructure projects including community solar. This substantial investment encompasses a wide range of initiatives, including the development of nearly 300 new solar, wind, and battery energy storage projects.
