US EIA expects solar to account for 5.6% of US energy mix by 2024, increasing to 7% by 2025



The US EIA headquarters in Washington, DC. Image: Library of Congress

The US Energy Information Administration (EIA) has published its latest Short-Term Energy Outlook, with the US government body now expecting the contribution of solar power to the US’ energy mix to exceed that of hydropower by 2025.

The report, the latest in the EIA’s monthly series, forecasts figures for the US energy mix to December 2024, and concludes that solar will account for 5.6% of the US energy mix by the end of 2024, increasing to 7% by the end of 2025. This is an increase on the 4% in 2023, suggesting that both solar deployments, and the importance of the solar sector to the broader US energy mix, are growing.

The forecasts are particularly encouraging for the solar sector in comparison to other industries, with the US solar sector expected to generate 286.4 billion kWh by the end of 2025, overtaking the contribution of hydropower, which is expected to contribute 266.7 billion kWh by the end of the same year.

Between 2023 and 2025, the US solar sector is expected to generate 123.1 billion kWh more electricity annually, a faster rate of growth than the wind sector, which is expected to generate 46.3 billion kWh more electricity annually, and the natural gas sector, which is expected to generate 12.5 billion kWh more electricity annually.

The graph above demonstrates these trends, and how the coal sector is the only one of the energy types profiles expected to produce less electricity in 2025 than in 2023. Coal’s contribution to the US energy mix is expected to fall from 655.4 billion kWh to 547.6 billion kWh over this period, and the replacement of coal assets with solar projects in particular, as is being considered by Xcel Energy in Minnesota, is clear evidence of this trend.

The growth of solar power in the US is nothing new, with many US manufacturers buoyed by the passing of the Inflation Reduction Act (IRA) in 2022, which sought to incentivise US-based equipment manufacturing. Earlier this year, First Solar completed the first tax credit transfer as part of the IRA’s new regulations, selling up to US$700 million of advanced manufacturing tax credits to Finserv, and deals such as this one help set a precedent for future transactions in the US solar sector.

More cautious predictions

However, it is worth noting that the EIA’s latest forecasts are less optimistic than those made in 2023. As the Short-Term Energy Outlook is published each month, it can serve an indicator of optimism for the future of a number of energy industries in the US, including solar, and recent editions of the report demonstrate a slight lowering of the EIA’s forecasts for solar generation.

The graph below shows the EIA forecasts of solar electricity generation in 2023 and 2024, made in July 2023, October 2023 and January 2024. It demonstrates how, in July 2023, the EIA expected the US to generate 171.8 billion kWh of electricity from solar in 2023, but by January 2024, this figure had fallen to 163.3 billion kWh. There is the same trend for the 2024 forecast, with the EIA expecting the US to generate 238.2 billion kWh from solar in 2024 back in July 2023, but this week is forecasting the US to generate 229.6 billion kWh this year.

Clearly, these are only minor lowerings of expectations, and the trend for solar generation is still positive, especially compared to fossil fuel sources such as coal, but point to growing uncertainty in the US solar sector as time passes since the passing of the IRA, and the optimism that the legation inspired begins to fade.

In 2023, questions were raised over the impacts of the antidumping/countervailing duty (AD/CVD) when Congress considered a vote to repeal president Biden’s waiver of the controversial tariff, and this week US solar manufacturer Auxin Solar took the Department of Commerce to court, arguing that, despite Biden’s waiver, the body should be implementing the tariff on Chinese-made goods to eliminate an “abuse of discretion”.

While the controversy over the AD/CVD ruling is nothing new in the US solar sector, uncertainties about the long-term financial viability of relocating manufacturing hubs to the US, or building entirely new manufacturing facilities on US soil, has tempered optimism regarding the sector’s long-term prospects. This is particularly relevant now, as the AD/CVD tariff waiver is set to expire in June this year, and uncertainty as to the financial basis of US manufacturing may have played a role in the EIA’s more conservative electricity generation estimations.

(The above content is reproduced from pv-tech,By JP Casey


Disclaimer: This website reproduces information from cooperative media, institutions or other websites. The publication of this article for the purpose of transmitting more information,and it does not imply endorsement of its views or confirmation of the authenticity of the content.  All information on this website is for reference only and can’t be used as the basis for transactions or services. If there are any infringement or other issues in the content of this website, please notify it in time, then this website will be promptly modified or deleted. Anyone who logs in to this website in any way, or directly or indirectly uses the information on this website shall be deemed to have voluntarily accepted the binding of this website statement.