Renewable energy development—particularly solar—is booming, with record growth in solar and energy storage installations in 2023. Utility-scale projects helped lead the increase, but now industry watchers are wondering if new supplies are growing fast enough to support surging demand, as new government incentives supercharge manufacturing and data center development. Some regulators are beginning to question solar’s reliability after several recent shutdowns caused by the inverters connecting installations to the grid.

As of early December, the Solar Energy Industries Association and analysts at Wood Mackenzie anticipated final 2023 totals to show the United States added 33 gigawatts (GW) of new solar capacity, after a 35% year-over-year increase during the third quarter, according to the organizations’ “Solar Market Insight Report Q4 2023.” This report offered several additional data points to illustrate how important solar energy is becoming to the nation’s power supply:

• Solar made up 48% of all new U.S. generation through 2023’s first three quarters, with total capacity at 161 GW and 4.7 million systems (including residential rooftop panels).
• Utility-scale installations grew 58%, versus 2022’s third quarter, when supply-chain constraints hobbled growth. The 4 GW total is similar to 2023’s second quarter figure.
• Global ripple effects related to an oversupply of photovoltaic (PV) panels in China pushed U.S. prices down by 10%–15%, even though sanctions drove U.S. imports of Chinese products to almost zero.
• Wood Mackenzie expects the U.S. solar industry to average 14% growth over the next five years, though interconnection and transmission issues could complicate growth after 2028.

The report adds that, as supplies of panels and other solar components have grown, utility-scale projects are being hampered by shortages of other types of electrical equipment. Transformer wait times have increased to more than two years in some cases. High-voltage circuit breaker lead times have nearly doubled in the past year to an average of 100 weeks.

Trying to keep up

Even a sustained annual growth rate of 14% might not be enough to keep up with demand that could rise even faster, as high-tech manufacturers and data centers begin taking advantage of recent U.S. legislation to expand operations. This is the key takeaway from the December 2023 report, “The Era of Flat Power Demand is Over,” released by clean energy consulting firm Grid Strategies. Its research found that while grid planners have been forecasting U.S. demand to grow 0.5% annually for the last decade, demand in 2023 was up at least 0.9%. Federal forecasts for total growth over the next five years have jumped to 4.7%, from 2.6% in just the last year. Peak demand is now expected to grow by 38 GW through 2028.

Three pieces of legislation passed in 2021 and 2022—the Infrastructure Investment and Jobs Act, the Inflation Reduction Act and the CHIPS and Science Act—are seen as key drivers for this leap. For more on what is in these laws, check out “We’re in the Money” in the January 2024 issue of ELECTRICAL CONTRACTOR. Some $630 billion in near-term investments have been announced since 2021, according to Grid Strategies, including about $481 billion in manufacturing plants and $150 billion in data centers through 2028.

The authors argue the United States must grow its transmission capacity—especially between today’s mostly siloed regional grids— to ensure carbon-neutral power availability for manufacturing and data center developers. Building generation near new facilities could result in system-wide overcapacity at a cost of billions of dollars per gigawatt of new load. Interregional transmission could cost less than $300 million per gigawatt of new load, according to Grid Strategies.

Inverter updates needed

As utilities turn to solar resources to meet growing demand, the inverters connecting PV, wind and storage installations to the grid are causing concern. In 2020 and 2021, inverter glitches caused large solar arrays to drop connections in Odessa, Texas. The 2021 instance took 2,500 megawatts offline, nearly causing system-wide impacts. 

The problem is that most inverters today aren’t designed to ride through the kind of voltage variations caused by a lightning strike or falling tree. On the plus side, these inverter-based resources can come back online in as little as a few minutes, but that might still be too late to prevent an outage cascade.

This hasn’t been an issue until recently, as renewables have become such a large contributor to power supplies. Now, developers are facing pressure from utilities and regulators to update their inverters or potentially lose their contracts. Texas’ grid operator ERCOT has proposed a rule requiring wind, solar and battery operators to update inverter programing and technology to prevent grid disturbances from knocking equipment out of service. Those not meeting this standard by the end of 2025 could be forced to withdraw from the state’s electricity market.

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