WoodMac sees ITC extension delivering 132 GW of extra solar by 2030

The proposed 10-year extension of the investment credit tax (ITC) could boost US solar installations by 44% over the next decade, Wood Mackenzie said on Monday.

The extension, proposed by the House of Representatives, is now before Congress as part of the budget reconciliation package. Under the proposal, the current ITC would apply to projects starting construction by the end of 2032.

According to Wood Mackenzie, if the extension is approved, the US will add 432 GW direct current (DC) of new solar capacity to the grid by 2030, or about 44% more than the base case outlook of 300 GW DC.

This however will still not be sufficient to reach 80% carbon-free power generation by 2030.

Based on the US Department of Energy’s recent Solar Futures Study, the US will need to have 714 GW DC of solar by 2030 to be on course to decarbonise its grid. Wood Mackenzie projects 528 GW DC of cumulative solar installations by 2030, 26% below the capacity required in the Solar Futures Study.

The ITC extension is expected to have a more pronounced effect in the second half of the decade when current supply constraints abate.

“An extension would reduce the future cost of utility-scale solar, making it competitive with wholesale power prices across the majority of the country,” said Sylvia Leyva Martinez, senior analyst at Wood Mackenzie.

As solar becomes more price competitive, other limitations such as grid interconnection will have a bigger effect on hindering growth.

The analyst firm said that energy storage and strengthened transmission and distribution infrastructure will be needed to achieve US president Biden’s climate targets.

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