Where are solar markets expanding?

With global markets across various industries, solar power is one of the fastest-growing energy sources. Certain countries and states, like China and California, have dominated the solar industry for years. But, between net-zero carbon emission goals and various climate policies, solar markets worldwide are growing. In this article, we break down the countries, U.S. states, and expanding solar market segments.

Although the adoption of solar energy is growing worldwide, long-time solar leaders continue to dominate the global market. China, the United States, Japan, India, and Germany produce the vast majority of today's capacity – in 2021, these five countries collectively contributed over two-thirds of all solar power.

China

China remains the largest producer of solar energy and the largest solar equipment manufacturer in the world, with no plan to slow down anytime soon. In addition to their 306 Gigawatts (GW) of installed capacity from 2021, China deployed more than 30 GW of solar systems in the first half of 2022 alone. Additionally, 80% of all key solar manufacturing stages happen in China, which is expected to increase to 95% by 2025. China's history of ambitious energy goals and policies lead to its impressive solar market dominance.

The United States

From less than 9 GW of installed solar capacity in 2012 to over 95 GW in 2021, the U.S. solar market has proven to be one of the most expansive in the world. Solar in the U.S. is expected to reach new heights under President Biden's goal to meet 40% of electricity demands with solar, a massive increase from solar's current contribution of 3%. However, the Inflation Reduction Act and other solar incentive programs improve the odds of these ambitious goals being met successfully.

Countries with the most solar power potential

Solar panels work ideally in places with year-round sunny conditions. So, why do places like Germany, which lose a considerable amount of daylight during the winter months, have some of the largest solar generation capacities in the world? Despite its exponential growth, global solar generation has a long way to go before it meets its potential – many regions with the highest solar power potential currently account for some of the lowest solar generation capacities. However, as countries aim to strengthen their energy security and combat the energy crisis, solar power potential and generation capacity may begin to match up.

Like China on a global scale, California has dominated the U.S. solar market for years. But between falling costs and increased pressure to meet clean energy goals, all 50 states now have solar markets. While the Golden State has been ahead of the curve and remains the largest producer of solar in the U.S., recent climate policies and incentive programs at the federal, state, and local levels have allowed other states to chip away at California's lead. For example, the Texas solar market is projected to grow by 40,136 MW over the next five years, almost double California's projected market growth at 24,874 megawatts (MW).

Top solar states in 2022

Unsurprisingly, California prevails as the solar leader in 2022: with 38,145 MW of cumulatively installed solar through the third quarter of 2022, California's capacity is more than double that of Texas, the runner-up. The chart below uses data from Solar Energy Industries Association (SEIA), an organization focused on the clean energy economy, to outline the states with the most installed solar capacity as of Q3 2022.

Top five states with the highest installed solar capacity

Source: Solar Energy Industries Association (SEIA)

States with the highest projected rooftop solar growth

California, Florida, New York, Massachusetts, and Texas are the top five states with the highest projected rooftop solar adoption as of 2022.

Today's U.S. rooftop solar market is still relatively disproportionate state-to-state – California accounts for 2,094 MW of projected total adoption, whereas South Dakota claims just 5 MW. But, thanks to recent solar policies and increased incentive programs, rooftop solar is expected to grow significantly in all 50 states. While big solar states, like California and Florida, are still on track to produce the most megawatts, some smaller state markets are projected to expand faster. For example, the Institute for Local Self Reliance (ILSR) projects that Iowa's total adoption of rooftop solar will jump from 22 MW to 457 MW over the next ten years and eventually to 1,200 MW by 2042 – a 5,355% increase from 2022. For reference, California's total adoption is expected to increase from 2,094 MW in 2022 to 3,4639 MW in 2042 – less than one-third of Iowa's growth rate!

The chart below details the projected growth rate of each state's rooftop solar adoption from 2022 to 2042, using ILSR's forecasting model.

Projected rooftop solar growth rate by state

We often hear about the expansion of solar as a whole, but different types of solar markets make up these solar rankings and statistics. Home solar systems, community solar projects, utility-scale solar arrays, and other solar technologies are all segments that contribute to any particular solar market mix.

Home solar

Between recent power outages and rising utility rates, the demand for rooftop solar continues to set new records. In just the second quarter of 2022, nearly 180,000 households in the U.S. installed solar. The IRA is projected to expand residential solar capacity by an additional 7.3 GW over the next five years.

Community solar

Community solar allows residents and businesses to subscribe to a local solar farm and participate in solar without installing anything on their property. As of Q2 2022, 41 states and Washington D.C. had at least one community solar project installed. Over the next five years, the U.S. community market is set to add more than 5 GW of capacity.

Utility-scale solar

Utility-scale solar projects feed electricity to the grid like community solar farms but sell the electricity directly to the utility instead of to ratepayers. With just under 17 GW of utility-scale solar projects contracted during the first three quarters of 2022 (January 1-September 30), the utility-scale segment is projected to lead the solar industry's growth in the coming years. Furthermore, the next five years will see 162 GW of new utility-scale capacity in the US.

Solar energy is a long-lasting, cost-cutting, emission-free electricity solution continuously evolving to meet the needs of homeowners and the natural environment. From home solar installations to community solar subscriptions, EnergySage provides qualified comparisons to find a solar system that fits your energy and budget needs. Sign up on the EnergySage Marketplace to receive free quotes from qualified, pre-vetted installers, and use the Community Solar Marketplace to explore and compare projects near you!