Record small-scale solar capacity added in 2022

12 September 2023

The Energy Information Administration estimates that the United States added 6.4 GW of small-scale solar capacity in 2022, the most ever in a single year.

The term small-scale solar – also known as distributed solar or rooftop solar – refers to solar-power systems with 1 MW of capacity or less. Rooftop solar panels installed on homes make up the major proportion of small-scale solar capacity in the USA. They are also used in the commercial and industrial sectors.

Small-scale capacity grew from 7.3 GW in 2014, which is when the EIA started publishing these estimates, to 39.5 GW in 2022. These installations make up about one-third of the total solar capacity in the United States.

Tax credits and incentives, public policy, and higher retail electricity prices have encouraged the growth of small-scale solar capacity over the past decade. Falling solar panel costs have also played a significant part.

California has, by far, the largest share of the country’s small-scale solar capacity, at 36%. Ample sunshine, favourable incentives, and relatively high electricity prices have encouraged rooftop solar adoption in the state, where the Net Energy Metering Programme allows rooftop solar panels to be connected to the power grid and provides credits for any surplus electricity produced by the installation and sent to the grid. Since 2020, California has required new-build single-family homes and multi-family buildings up to three stories high to have solar panels installed.

New York and New Jersey – mid-Atlantic states with less year-round sunshine – have the second- and third-most small-scale solar capacity, respectively, although in recent years, Texas and Arizona have been closing the gap. Long-standing state policies in New York and New Jersey offer generous solar incentives and have encouraged small-scale solar growth.

Many of the states with the most small-scale solar capacity also have large populations. Accounting for population size provides insight into how prevalent small-scale solar capacity really is in a state. Although California has the most small-scale solar capacity, Hawaii has the highest small-scale solar penetration, at 541 W per capita.

A large share of Hawaii’s electricity has historically come from oil-fired power plants. These plants rely on fuel imports, resulting in high electricity bills. As solar panel costs have fallen, many homes and businesses in Hawaii have added solar panels, reducing their electricity bills and helping the state work toward its target to generate 100% of its electricity from renewable sources by 2045.

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