Adoption of Small Solar Systems Rising Quickly

Small-scale solar capacity has risen dramatically in the U.S. over the past decade, a new Energy Information Administration (EIA) report estimates.

Small-scale solar is defined by the EIA as photovoltaic systems that have less than one megawatt (MW) of generating capacity. Such systems are usually installed at or near residential, commercial, or industrial customer sites. Rooftop solar panels installed on homes make up the majority of this category.

Recent estimates by the EIA, based on U.S. Census Bureau Information, indicate that small-scale solar capacity grew from 7.3 gigawatts (GW) in 2014, the first year such estimates were published, to 39.5 GW in 2022. Small-scale solar makes up about one-third of the total solar capacity in the U.S., the report indicates. In the first six months of 2023, total capacity reached 44 GW, data indicates.

The EIA said that tax credits and incentives, public policy, and rising electricity prices have played a significant role in the rapid growth of small-scale solar, as has the falling price of installing a system.

Not surprisingly, California has the most small-scale solar by far, with 36 percent of all capacity. The state has encouraged solar use, and starting in 2020 began requiring newly built homes to install solar panels.

However, two not-so-sunny states – New York and New Jersey – are second and third in solar capacity, also due to solar incentives, the EIA said. Several sunnier states, Arizona and Texas, are fourth and fifth in capacity. Pennsylvania ranks 13th in small-scale solar capacity, at 625.3 megawatts. The state does offer renewable energy credits, in addition to federal credits, and allows net metering, where excess electric generation from the solar system can be sold back into the grid with the customer being credited at the full retail rate.

The EIA’s Annual Energy Outlook for 2023 projects that renewable energy sources are increasingly replacing fossil fuels in the nation’s energy mix, and their use will continue to grow as the technology improves, costs continue to fall, and federal policy encourages installation of solar systems through incentives.