Utility-scale solar’s rapid growth

By Dennis Wamsted and Seth Feaster | IEEFA

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The Energy Information Administration (EIA) did not even begin releasing solar generation data until 2014, and utility-scale solar generation did not top 1% of total electricity output until 2017. But the situation has changed significantly in the past five years. 

Texas and California still drive the market, with output in both states setting new records this summer. Generation by the Electric Reliability Council of Texas, or ERCOT, which supplies most of Texas, passed the 20,000 MW mark on July 16, a first for any state. California likely will soon reach the 20,000 MW figure, as well; its output hit a record 19,348 MW in June. More records can be expected as new facilities enter commercial operation in both states. 

But those two states are only part of the solar story. Growth is occurring across the U.S., as the charts below demonstrate. In 2018, only four states generated 5% or more of their power needs from solar. By 2023, this had jumped to 15. Equally noteworthy, these 15 are not just located in the southern tier of the U.S. — solar works everywhere, as the robust growth evident in Idaho, Maine, Massachusetts and Vermont shows.

Utility size also is not a determining factor in the growth. Solar now accounts for 9.3% of the generation at Florida Power and Light, the nation’s largest utility with 5.7 million customer accounts, up sharply from 2% in 2019 (data through June 15 of both years). At the other end, Public Service Company of New Mexico, which only has 500,000 customers, now gets 16.5% of its generation from solar, up significantly from 4.5% in 2019. Importantly, these increases in market share occurred even as total generation at the two utilities was climbing, meaning solar accounted for a larger share of a bigger market.

Past as prologue

Final EIA data through April shows that solar generation nationally is up 25.5% compared to the same year-earlier period. Particularly noteworthy? Output is up in every state in the country. Another way of looking at the growth is presented below. Generation in the month of June has jumped 3.5 times since 2018, climbing to 25.42 million MWh this year, according to data from EIA’s July Short-Term Energy Outlook — 6.7% of total net U.S. generation.

John Ketchum, CEO of NextEra Energy, the parent company of FPL and NextEra Energy Resources, a major renewable project developer, predicted at the company’s recent investor day meeting that more than 450,000 MW of new renewable energy generation could be added to the U.S. grid in the coming seven years. We decided to model what that growth could do.

First, some background. We opted to be conservative and reduced his forecast by 50,000 MW. Out of the remaining 400,000 MW, we assumed 300,000 MW would be solar and 100,000 MW would be wind, which tracks recent development trends. To calculate generation, we assumed the solar resources would operate at a capacity factor of 26%.This is slightly higher than the long-term U.S. average but tracks the latest data from the National Renewable Energy Laboratory’s Annual Technology Baseline report. We used a 45% capacity factor for wind, which is slightly lower than NREL’s projection for both on- and offshore projects.

The results are presented below.

Solar, wind growth on fast upward trajectory

This is admittedly a top-level estimate, but it shows that renewables, led by solar, can meet significant projected demand growth while also making the U.S. grid significantly cleaner. There are a couple of key takeaways from this table. First, by 2030, solar would be the second-largest generation resource on the U.S. grid—remarkable growth from 2017 when it first topped 1%. Second, the solar and wind growth would push fossil fuels below 50% of total generation in the U.S. for the first time in decades.

A word about rooftop solar

The data above also leaves out a key component of total solar generation, and one that is also growing quickly: rooftop or behind-the-meter (BTM) solar in residential, commercial, and industrial applications. EIA data shows that small-scale solar is expected to generate 85 million MWh of electricity in 2024, double the 42 million MWh generated in 2020. This amounts to a little less than 2% of total U.S. generation, but rooftop solar is already a key resource in daily generation in certain regions. 

In the six-state New England region (not traditionally considered a solar hotbed), rooftop solar growth has been strong and is accelerating. In 2019, the regional grid operator said it would be 2028 before installed BTM solar capacity topped 6,500 MW. The region hit that mark by the end of 2023, with the grid operator now projecting that BTM capacity will climb to more than 10,000 MW by 2028.

That capacity plays a significant role in meeting the region’s generation needs. BTM solar set a new peak record of 6,393 MW on June 1, more than double the level of just two years ago. During that record-setting day, BTM solar accounted for more than 30% of the region’s electric needs for seven straight hours. Overall, between April 1 and June 15, BTM solar generated more than 11% of New England’s electricity—a remarkable performance and one that is set to continue rising. 

No matter where you look, the growth in solar has been dramatic, and the show is just getting started.

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Dennis Wamsted and Seth Feaster. are analysts with the Institute for Energy Economics and Financial Analysis (IEEFA). This report first appeared in the summer issue of IEEFA’s By the Numbers newsletter, focusing on the rapid growth of the U.S. utility-scale solar generation sector. 

Tags: utility-scale