Half of New Electric Capacity This Year Will be Solar

More than half of the new electric generating capacity expected to added to the electric grid this year will be solar, a recent U.S. Energy Information Administration survey found.

The EIA said that developers added 12 gigawatts (GW) of solar capacity in the first half of this year, with another 21 GW expected by the end of 2025. The agency cautioned that number depends on all planned projects being realized. Solar would account for more than half of the 64 GW of new capacity planned to go online this year, with the remainder coming from battery storage, wind, and natural gas.

While solar’s share of the generation mix continues to increase, that could be temporary due to major recent policy changes affecting solar projects. A recent report by consulting firm Wood Mackenzie downgrades the outlook for utility-scale solar projects after this year’s passage of legislation that makes sweeping changes to clean energy tax credits, phasing out several and shortening the timeline for construction of solar projects in order to qualify.

This may spur a rush by solar developers to get projects under construction and online in the next few years in order to qualify for tax credits, followed by drop due to the uncertainty around qualifying for the credits.

The Wood Mackenzie report predicts a base case of 246 GW of new capacity that will be added added between 2025-2030 as projects already in the planning stages come online. However, with the added federal policy uncertainty, a low case forecast results in about 30% less solar capacity coming online in 2026 and 2027 and then averaging 17% less. BloombergNEF predicts that U.S. clean-energy installations could drop by 41% after 2027 due to elimination of the tax credits.   

The EIA’s prediction of 64 GW of new capacity would set a record for new power additions, and that power is badly needed as U.S. demand for electricity continues to rise, driven mainly by the rapid growth in the development of power-intensive data centers. The North American Electric Reliability Corp. and regional electric grid operators are working intently to address the rising power needs and develop standards for data centers seeking huge amounts of electricity in order to ensure reliable, affordable service to residential and other commercial customers.