The US government recently announced a two-year suspension of tariffs on solar panels imported from countries in Southeast Asia such as Cambodia, Thailand, Vietnam, and Malaysia. According to the United States Census Bureau (USCB), the four countries in Southeast Asia account for 80% of the solar panel imports by the US. The rationale behind the suspension of tariffs is to ensure a reliable supply of solar components, overcome the slowdown in new solar installations, and increase the domestic solar power generation capacity.
The US Solar Energy Sector Overview
Solar energy is one of the fastest-growing in the renewable energy sector in the US. Solar energy markets in the US are expanding rapidly, as solar electricity is now cost-competitive with traditional sources of energy in most of the states in the US. The average cost of solar PV panels decreased 70% since 2014. According to GlobalData, solar PV power generation grew from 116,767.5 GWh in 2018 to 206,206.1 GWh in 2021 at a CAGR of 21% during 2018–21. Solar PV power generation is expected to reach 253,667.3 GWh by 2022.
However, several factors continue to hamper the country’s ability to generate enough electricity to meet the projected demand from customers. Energy market disruption caused by Russia's invasion of Ukraine, besides extreme weather conditions exacerbated by climate change continue to influence the sector. For instance, drought conditions combined with heatwaves are causing electricity supply shortage, besides increasing demand for electricity in some parts of the country.
Sector Outlook
The US is yet to realize the full potential of solar energy as a sustainable energy source, and more effort is needed to accelerate the adoption of solar technologies. The suspension of tariffs would benefit solar developers and utilities in the US that rely on imported solar panels. The US government also works in collaboration with the private sector to increase domestic solar manufacturing capacity, including the ability to produce modules and other solar supply chain inputs.
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