Cumulative US community solar capacity is expected to break 6GW in 2023, despite interconnection and siting challenges, according to Wood Mackenzie.
Though installations declined by 6% year-over-year in 2022 and 13% in Q1 of 2023, due to supply chain uncertainty as well as interconnection and siting issues in some states, community solar growth is expected to return in 2024.
This growth is expected through to 2029, finds the report, published by Wood Mackenzie in collaboration with the Coalition for Community Solar Access (CCSA).
Going forward, Wood Mackenzie has forecasted existing markets will grow by an annual average of 8% with nearly 14GW of cumulative capacity expected by 2028.
This forecast does not include the potential of new programmes which could result in a significant uplift.
“Near-term growth is driven by the continued success of programs in New York and Illinois as well as positive policy updates in Maryland, Minnesota, and New Jersey.
“In addition, California’s newly proposed program has the potential to represent 20% of Wood Mackenzie’s national outlook between 2024 and 2028,” said Caitlin Connelly, research analyst at Wood Mackenzie.
For the Inflation Reduction Act (IRA), recent guidance from the US Internal Revenue Service regarding investment tax credit (ITC) bonus adders has shown that qualifying for more than one adder will be difficult.
Community solar developers can qualify for any of the three ITC bonus adders but are most likely to seek the low-income communities (LMI) adder first, according to report findings.
The $27bn Greenhouse Gas Reduction Fund (GGRF) also provides new opportunities for community solar.
The US Environmental Protection Agency’s Solar for All fund within the GGRF will be beneficial for community solar, granting up to $7bn in funds to support the creation and expansion of community solar programmes with an emphasis on supporting low-income communities.
Wood Mackenzie and CSSA’s reporting now includes alternative forecasts for community solar, resulting in either an uplift or downgrade to Wood Mackenzie’s business-as-usual base case.
The report also shows that subscriber management companies Arcadia, Perch Energy, and Ampion now manage more than 50% of the total community solar market.
“Successful subscriber management companies have been seen to utilise software tools which lowers subscriber acquisition costs and have business models oriented toward successfully targeting low-income populations,” Connelly said.