2022 IRA: Mid-Market Solar’s Growth Projections
Remember your high school physics class? It applies to solar’s middle market… just hear me out! This market appears to be at an inflection point where much of the potential energy FINALLY converts into kinetic energy.
The IRA passed in August, and as you may recall, I took the stance that this market was going to double in five years and triple within ten years. Since then, we’ve seen Wood Mackenzie publish their five-year forecast and we’ve also polled the market directly (30 of our industry friends during the RE+ conference).
To set the stage, when I reference the “Market Size” for solar’s middle market, I’m referencing the cost to build all non-residential projects 5MWac and smaller in the US for a given year. I’ll note that Wood Mackenzie segments the market differently than we do, so we’ve had to apply some creative analysis to interpret their estimates from the always great Quarterly Market Insights Report (#WoodMackenzie - please reach out if you have feedback here or a ten year stance).
Here are the takeaways from this chart:
I’m going to reconsider our estimates given the market sentiment!
This market believes it has a ton of room for growth, hence the potential to kinetic reference. With the passage of the IRA, many players are seeing more projects pencil out and are expecting more opportunities to move forward than ever before
While growth is fun, it also can be hard to manage effectively. Certain aspects of the market (cough - the financing process - cough) will need to evolve in order to handle this growth effectively
Wood Mac references a few macro views such as supply chain delays and state policy caps that they believe will keep this market from truly popping over the short term. While I’m optimistic those effects won’t be as intense (or last for as long), there’s no denying that supply chain disruptions have been an issue in 2022
Some other headwinds that the industry is facing include inflation and interest rate hikes. We’ll work up some analysis in the upcoming weeks to show how these competing forces dampen some of the IRA tailwinds already in place
Have predictions on the market size in five years (2027) and ten years (2032)? Email them to us (info@conductor.solar)! We’ll circulate more detailed stats and ranges to anyone who participates.