Distributed solar installed in 2021 nearly matches capacity of all new gas plants


Demand for electricity in the US is growing as more people power cars, appliances, and home heating with electricity rather than fossil fuels. But to be powered by clean energy, that electricity must be generated by renewable sources. According to the ILSR annual update, choosing to build renewable generation resources has become the norm rather than the “alternative.”

In 2021, for the first time ever, nearly half of new electric generation capacity added to the grid was from solar. Long overlooked as a scalable resource, the distributed solar installed in 2021 nearly matched the capacity of all gas plants built last year. And while this is a first, it is a trend that has been building because, in the last decade, there have been only two years in which the capacity from new gas plant construction outpaced renewable energy buildout.

The gap between gas and distributed solar has been narrowing for several years. In 2021, added gas and small solar capacity were almost equal; 5.7GW worth of gas plants were built this year, while developers installed 5.4GW worth of residential and customer solar.

According to SEIA and Wood Mackenzie, solar developers installed over 500,000 residential solar projects in 2021, despite many challenges including interconnection delays or other prohibitive policies set by utilities. However, there is some good news: thanks to a ruling by the US Ninth Circuit Court of Appeals, utilities may be subject to antitrust litigation for their anticompetitive behavior.

Another challenge is net metering rule changes, as seen in California, Florida as well as other states. In Florida, for example, House Bill 741 and Senate Bill 1024 (passed and awaiting the Governor’s signature) aim to dramatically reduce the benefits of net metering for customers.

Also of concern is disproportionate support for wealthier Americans when it comes to going solar. According to research by the Rocky Mountain Institute, the current federal solar investment tax credit has disproportionately benefited wealthier, higher-income, and often whiter households. Changing this incentive to a refundable or direct pay tax credit would help more Americans go solar.

Despite these challenges, solar and other renewable generation resources are proving to be more cost-effective than fossil fuel generation.

Many states and cities have set resolutions to be carbon neutral in two or three decades. Many, however, need to rethink building new gas plants because with a lifespan of 40 years, the states would have little chance of meeting carbon-neutral goals.

Solar breaks records in fourth quarter 2021

New generation capacity in Q4 2021 was just under that of 2020’s: 14GW new gas, wind, large solar, and distributed solar resources came online. Both large and small solar broke their respective records for quarterly growth. Paired with a surge of new wind generation capacity (more than double the capacity added last quarter), renewable resources contributed 85%of generation capacity buildout this quarter.

Distributed solar broke records—again. Despite supply chain delays, 1.6GW of distributed solar capacity were installed in Q4 , breaking the previous quarter’s record. If the federal government extends or tweaks the federal investment tax credit, the demand for residential solar could grow even faster.

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