Solar Industry Confronts Fresh Obstacles

Soaring growth of solar power has been a bright spot in the U.S. energy transition. The outlook for solar could be dimming.

The pipeline for new big solar projects has fallen since August of last year, according to a Wall Street Journal analysis of U.S. Energy Information Administration data. For years, as projects became operational, more new ones entered the planning phase. Now the pipeline has been slow to refresh.

Nearly 24 gigawatts of big projects called utility-scale solar are slated to go online in 2024 but that figure falls to 16.4 gigawatts by 2028, the Journal's analysis shows. In the last five months of this year, solar is expected to account for two-thirds of all new electric generating capacity, the EIA said.

A record amount of new capacity—17.7 gigawatts—was postponed or canceled this year as of August, the most recent month available, up 64% from a year earlier.

Setbacks can happen for a variety of reasons. Trade disputes, labor shortages and delays connecting to the grid are holding the sector back through 2029, according to energy analytics firm Wood Mackenzie.

The nation's aging power grid is one of the biggest bottlenecks to adding renewable energy capacity.

Nearly 11,600 projects with about 2.6 terawatts of generating and storage capacity are seeking connection to the grid, up nearly 570% in the past decade, according to a recent study by the Lawrence Berkeley National Laboratory. Wind, solar and battery storage make up about 95% of the active projects seeking to connect to the grid.

Wait times are also growing: Projects last year took nearly five years to begin operating after requesting connection, up from less than two years in 2008.

 

Solar has been the star of renewable energy in part because wind power, especially offshore projects, have lagged. Solar prices have fallen well below the cost of generating electricity with fossil fuels.

Florida-based utility and green power goliath NextEra Energy has a backlog of about 4 gigawatts of clean-energy projects to help power data centers, according to Rebecca Kujawa, CEO of the company’s renewable-energy-development arm. "What's not changing is the need to build transmission," she said during the company's July investor call. [But data centers run at nighttime. That’s a big problem big tech is finally acknowledging.]

A slowdown in rooftop solar installations is adding to the decline in growth. Higher interest rates are one reason. Another factor was new rules in California, the biggest producer of solar power, that made it more expensive to install rooftop solar, data from the National Renewable Energy Laboratory show.

Residential solar could return to growth next year, driven in part by generous tax credits, according to Wood Mackenzie.

Last month, Wood Mackenzie reduced its 2024 residential solar installation estimates through 2029 by 2% and forecast a 15% drop in commercial installations next year. Wind energy isn't expected to pick up the slack. Last week, the International Energy Agency dropped its U.S. wind energy forecast for the next five years by 20%.

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