1 of 3 | After struggling to gain traction last year, consultant group Wood Mackenzie is forecasting a dramatic uptick in solar energy capacity. File photo by Stephen Shaver/UPI. | License Photo
Feb. 15 (UPI) -- Despite lingering supply-chain issues, the U.S. solar energy market is poised for a substantial rebound over the next five years, driven in part by federal incentives, consultant group Wood Mackenzie said Wednesday.
The company estimated that community-level solar power capacity declined by 16% last year, compared to the previous year, due to interconnection delays across various key markets along the U.S. East Coast. Lingering supply-chain issues created further headaches for the sector, forcing some developers to extend their project deadlines.
But despite the lackluster performance, Wood Mackenzie is expecting a 118% increase in the solar market over the next five years. Caitlin Connelly, a research analyst at the consultant group, said sections of last year's Inflation Reduction Act should incentivize much of the expected growth.
"Community solar developers are well-positioned to take advantage of the new and extended investment tax credits once guidance is released in 2023," she said in an emailed report.
Apart from the expected tax incentives, the federal government said the IRA represents a massive down payment on a clean energy future and sets a goal of lowering total greenhouse emissions by 40% from a 2005 baseline by the end of the decade.
Renewables are already gaining traction in the U.S. economy. The federal government sees the share of natural gas used to generate electricity declining from 39% last year to 37% in 2024. Coal's market share drops from 20% to 17% by 2024 and renewables increase from 22% in 2022 to 26% next year.
Gains in renewable energy come from the planned addition of 63 gigawatts of power from solar and another 13 GW of wind energy capacity. Over the next three years, meanwhile, the International Energy Agency expects renewable energy will "dominate" growth in global electricity supply.
After a decline of 2% during the worst of an energy crisis triggered by the war in Ukraine, the Paris-based consortium anticipates global demand for electricity increases by 3% over the next three years, with most of that growth coming from the economies of Southeast Asia, India and China.
"The good news is that renewables and nuclear power are growing quickly enough to meet almost all this additional appetite, suggesting we are close to a tipping point for power sector emissions," IEA Executive Director Fatih Birol said.