Solar PV Market Analysis

Component manufacturing and trade dynamics in key countries

Solar PV is a cornerstone of clean electricity generation and overarches the goal of achieving sustainable energy transition and net-zero emission by 2050. The PV supply chain starts with the refinement of polycrystalline silicon or polysilicon, derived from metallurgical-grade silicon (MGS) and crystalline silicon (c-Si). Approximately, 96% of global PV module shipments in 2020 used c-Si technology, made from melting polysilicon chunks into ingots, slicing them into thin wafers, and converting the wafers into PV cells and PV modules. Other PV modules use cadmium telluride (CdTe) technology, with higher adoption in the U.S. (16% compared to 4% worldwide) and c-Si representing the other 84%.

The U.S. PV Supply Chain Dynamics:

Solar photovoltaics play a pivotal role in the U.S. efforts to reduce GHG emissions and minimize the impact of climate change. Decades of innovation and significant cost reductions so far have made PV one of the most affordable forms of electricity generation. In regards to, decoupling from China’s raw material supply and its influence in the U.S. manufacturing sector, the country is striving to bring PV supply chain in-house. The U.S. has a certain thin-film CdTe module production capacity that does not rely on obtaining raw materials from China. Over 16% of CdTe module installations are all supplied by a single U.S. company that also produced one-third of those CdTe modules in the U.S. Given the rate at which the economy is inching toward decarbonization, it is unlikely that any alternate technology, including CdTe, could fully displace conventional electricity generation before 2050.

Solar power represented 5% of the energy generation capacity addition in 2010 and as of 2024, its share rose to 58%, accounting for a whopping 36.4 Gw of 62.8 Gw total electricity generated in the U.S. (almost double of 18.4 Gw in 2023). As described in the follwing graph, it is estimated that in a business-as-usual case, the global shipments will reach 200 GWdc by 2030, and in global decarbonization scenario, it could grow to over 500 GWdc by 2030.

Domestic Production of Feedstocks, Ingots, and Wafers in 2022

Despite this growth, electricity decarbonization in the U.S. would require a significant acceleration of annual PV deployment. In an aggressive grid decarbonization scenario, the country’s deployment growth is likely to quadruple by the end of 2030 from 19GWdc in 2020. SEIA reported 40.3 GWdc of PV was installed in 2023 and a cumulative of 186.5 GWdc. 22 states registered a 5% electricity generation from solar, with California accounting for the highest of 28.2%. However, solar still represented a mere 5.6% of annual generation and 11.2% of net summer capacity in 2023In 2023, 26.0 GWh / 8.8 GWac of energy was stored onto the electric grid, which was a 34% y-o-y surge. That being said, in business-as-usual scenario, global shipments are estimated to reach 200 GWdc and in total decarbonization case, it could grow beyond 500 GWdc by 2030.

Strategies, Actions, and Recommendations:

Production Tax Credit (PTC) and Investment Tax Credit (ITC) are the primary framework policies in the U.S. However, the most prominent change in direct support policies was implemented in 2022 with the introduction of the Inflation Reduction Act (IRA), a federal law for loans, grants, and tax credit expansions. This has been pivotal for small- and large-scale PV manufacturing and installations in a socially equitable manner. The law has sanctioned USD 370 billion in investments and U.S. EPA’s GHG Reduction Fund has allocated USD 7 billion in grants.

The IRA offers the following solar production incentives:

Source: The European Technology and Innovation Platform for Photovoltaics

Summary of the tax credits applicable to PV within the scope of IRA. MPTC = Manufacturing Production Tax Credit, PTC = Production Tax Credit, ITC = Investment Tax Credit, GHG = greenhouse gas

Source: The European Technology and Innovation Platform for Photovoltaics

The c-Si module assembly began in the U.S. in 2018 using imported cells and by 2020, a 4.3 GWdc of PV modules was assembled with 24% over 2019. This growth was primarily led by First Solar’s strategic doubling of production capacity. As the PV demand continues to grow, more opportunities to further domestic manufacturing are set to surface. In the wake of import restrictions implemented in 2021, potentially traceable to China-based companies will inevitably strengthen the U.S. PV supply chain. Some of the prominent polysilicon companies in the country include Michigan-based Hemlock (with 35,000 MT of annual production capacity); Wacker (with 20,000 MT) operating in Tennessee; REC Silicon (with a 16,000 MT plant in Washington and 4,000 MT capacity plant in Montana) and Alabama-based Mitsubishi, (with 1,500 MT).  Hemlock, REC, and Wacker have been awarded tax credits under Section 48C, which subsequently helped in the expansion of polysilicon production capacity.

According to the EIA, the U.S. retail electricity sales were USD 3,861 billion, a notable rise from USD 66 billion in 2022. Retail sales comprise net imports or imports minus exports of electricity from Mexico and Canada.

Electricity sales to U.S. retail-electricity customers and percentage shares of total sales (2023)

U.S. electricity share percentages, by provider type (2022)

Electricity providers have been bifurcated into two groups including full-service providers, which supply bundled electricity services, and other providers. Full-service providers typically provide autonomously generated electricity or outsourced from other independent power producers. These include investor-owned utilities such as publicly traded stock electric utilities, public entities such as state power agencies, municipalities, and municipal marketing authorities, federal entities comprising power marketers and producers either financed or owned by the federal government, and cooperatives that are owned by and operated by cooperative members.

The percentage shares of electricity sales, by provider type (2022)

In addition to end-use customers' sales, electricity is often traded on wholesale markets or via bilateral contracts.

U.S. solar investments through 2023:

U.S. solar manufacturing and storage investments reached a record high in 2023, owing to both public and private funding.  A comparative analysis of 2023 and 2022 has been provided in the following table.

Source: U.S. Energy Information Administration, Preliminary Monthly Electric Generator Inventory

In 2024, the total energy produced added up to approximately 62.8 GW of new utility-scale electric-generating capacity which registered a steep surge from 18.4 GW in 2023. Solar held the largest share of new capacity, followed by battery storage. 50% of the overall solar capacity is accounted for by Texas (35%), California (10%), and Florida (6%). Besides the three states, Nevada’s Gemini solar facility which is expected to be commissioned in 2025, will allow a value addition of 690 MW of photovoltaic capacity and 380 MW of battery storage.  Furthermore, the U.S. battery storage capacity reached approximately 89% in 2024, with an extended capacity of 30 GW. This is a 705 rise from the 6.4 GW new battery storage capacity in 2023. The Inflation Reduction Act has also accelerated the energy storage development with investment tax credits (ITCs) for stand-alone storage. Prior to the IRA, batteries qualified for federal tax credits only if they were co-located with solar.

China’s influence on global solar photovoltaics:

Our in-depth analysis of the solar PV market includes the following segments: