As the concern over environmental pollution increases, it is no surprise that the solar industry is booming. Another key factor driving the growth of solar photovoltaic (PV) industry is the immense support the U.S. government has offered. The government increasingly keeps pushing for the adoption of solar energy by offering incentives and tax benefits for both the consumer and producers. The Energy Policy Act of 2005 established the Investment Tax Credit (ITC), which allows homeowners and businesses to deduct the cost of solar PV systems up to 50%. Because of incentives like the ITC, the number of systems being installed has significantly increased in the past decade. In 2018, the U.S. reached 64.2 gigawatts of solar PV. With this capacity, solar energy is powering over 12 million American homes. Homeowners are not the only ones taking advantage of these incentives. Big businesses are also investing in solar PV systems. Walt Disney World, Walmart, and Apple are all switching facilities and offices to solar energy.
Over the past decade, the average annual growth rate of the solar industry has been 50% and is expected to continue to see this growth for years to come. After reaching one million installations in 2016, and over two million in 2018, it is on track to reach over four million systems installed by 2023. Through 2023, this industry is expected to see a compound annual growth rate of 14.9%. Therefore, with the rising demand and support this industry is expected to be valued over $250 billion within the next four years.
Assuming this growth will continue, solar PV will become one of the cheapest sources of energy. We already have seen a whopping 70% drop in the cost of installation. With this drop, the industry has been able to expand into new markets and deploy thousands of systems nationwide. Furthermore, the U.S. economy has also benefited from this emerging industry. The solar industry now employs, directly or indirectly, over 370,000 Americans at more than 10,000 companies. Not only is it generating jobs, but also money. In 2018 alone it produced a $17 billion investment into the U.S. economy. We should expect to continue to see these positive outcomes from this industry as long as people and governments stride for cleaner energy alternatives.
Keith Knutsson of Integrale Advisors says, “The solar industry is growing at a record pace. Not only will it continue to be a leading force in the race for cleaner energy, but it will also serve as an economic engine for the U.S. economy.”