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Community solar experienced a downfall in the year 2022, which persisted into the first quarter of 2023. However, a report by Wood Mackenzie in collaboration with the Coalition for Community Solar Access (CCSA) predicts that it won't remain down for long. Although a decline has been experienced, the production capacity of community solar is anticipated to surpass 6 GW in the year 2023.
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Community solar plays a major role in providing an alternative for customers who are not suitable for rooftop solar. It involves subscribing to a portion of a solar project's generation and receiving utility bill credits in exchange. This community solar concept is widely accepted in the United States.
The report indicates that there was a 6 percent decrease in installations compared to the previous year in 2022 and a 13 percent decline in the first quarter of 2023. This decline is attributed to the uncertainty of the supply chain over the past year. Moreover, interconnection and project siting equally contributed to this decline. In Massachusetts and Maine, project siting is the major obstacle to the growth of community solar.
According to a report, community solar is expected to experience an annual growth rate of 8 percent starting in 2024. By 2028, nearly 14 GW of cumulative capacity is projected to be installed. The report suggests that potential new programs could lead to additional growth. According to Caitlin Connelly, a research analyst at Wood Mackenzie, programs in New York and Illinois will continue to drive growth in the near future. Positive policy updates in Maryland, Minnesota, and New Jersey also contribute to this growth.
The Inflation Reduction Act of 2022 offers a tax credit of 30 percent for the expenses incurred in developing renewable energy resources, but only if the developers comply with the labor requirements. Additionally, projects that cater to the community can receive three 10 percent adders. However, the report warns that qualifying for multiple adders can be challenging, and developers of community solar projects may first receive the low-income adder.
According to Procurement Resource, the market of Community solar is expected to grow by the end of 2023. Despite the decline in the year 2022 and the first quarter of 2023, the production capacity is forecast to go beyond 6 GW. Further, by 2028 it is expected to reach 14 GW.
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