A report by Wood Mackenzie and the Solar Energy Industries Association reveals that U.S. Solar industry growth will be 25% lower than originally forecasted in 2022 due to rising raw materials costs and supply chain constraints.

According to the quarterly update, prices are continuing to climb as industry struggles with same cost pressures that affect every sector of the economy. Trade uncertainty is another factor that has impacted the solar industry.

The third quarter saw increases in costs across all segments of residential, commercial and utility solar. second-straight quarter. Wood Mackenzie began to track the price changes in commercial and utility sectors in 2014, when they were at their greatest.

These price rises are particularly sensitive for utility-scale projects. While costs had dropped by 12% in Q1 2019, they have risen by 11% since Q1 2021. However, this recent rise in steel prices has erased the previous two years’ cost reductions.

Solar shipments were disrupted by a group that filed an anonymous petition to the U.S. Department of Commerce requesting tariff extensions to Vietnam, Malaysia, and Thailand. In November, the petition was rejected.

The U.S. still has a 33% increase in installed capacity to 5.4 gigawatts year-over-year, which is the highest number of additions recorded for the period between July and September. The Public Power Association reports that the United States has approximately 1,200 gigawatts of total generation capacity.

With more than 130,000 solar systems being installed within a quarter for the first-ever record, residential solar installations exceeded 1GW in the third quarter.

With 3.8 GW being installed in the third quarter, utility-scale set a new record. However, growth was not seen in all segments. Quarter-over-quarter, commercial and community solar installations declined by 10% and 21% respectively due to equipment delays and interconnection problems.

The industry will grow slower than expected in 2022 but the passage of the Build Back Better Plan could spur growth going forward.

Michelle Davis, Wood Mackenzie’s principal analyst said that the U.S. market for solar energy has not seen so many competing dynamics. The supply chain challenges continue to increase, placing gigawatts more projects in danger. A major market stimulant would be the Build Back better Act for this sector, as it establishes long-term stability and growth.

Wood Mackenzie projects that the U.S. would add 43.5 GW to its solar power capacity if this bill becomes law. This is in addition to the baseline projections between 2022- 2026.

The report stated that this would increase the cumulative US solar power to more than 300 gigawatts. This is three times the current amount.

This bill extends the Investment Tax Credit which was instrumental in the growth of the U.S. Solar industry.