The U.S. community solar market is projected to reach over 14 gigawatts direct current (GWdc) by 2029, with more than 7GWdc of new installations expected to come online in existing state markets, according to a report from Wood Mackenzie in collaboration with the Coalition for Community Solar Access (CCSA). The report highlights the strong near-term growth supported by established state markets, though it notes a potential slowdown as these markets saturate over time.
The study found that the national community solar market is expected to grow at an average rate of 5% annually through 2026. However, beyond that, the market is anticipated to contract by an average of 11% through 2029 as mature state markets reach their capacity limits. Despite this, expanded program capacity and the establishment of new state markets could provide an uplift beyond 2026.
“The U.S. community solar market has tripled in size since 2020, but growth is beginning to slow in existing state markets,” said Caitlin Connelly, senior research analyst at Wood Mackenzie and lead author of the report. She added that the May 2024 decision on California community solar resulted in a 14% reduction to the five-year national outlook, underlining the importance of new market entrants for sustained growth.
The report presents various scenarios for the future of the community solar market. Under a bull case scenario, the five-year outlook in existing markets could increase by 21%, while a bear case scenario predicts a 20% decrease. Notably, these scenarios do not account for the potential establishment of new state markets in Ohio, Pennsylvania, Michigan, and Wisconsin, all of which have significant interest and pre-development project pipelines. If these states and others enact the necessary legislation, the national community solar capacity could see a 17% uplift from the base case.
In a best-case scenario where both existing markets perform well and new state markets are successfully established, the cumulative national outlook could reach 17.1GWdc by 2029.
The report also highlights the growing role of federal incentives in the community solar sector. While the benefits of the Inflation Reduction Act (IRA) are significant, they come with challenges. Connelly noted that community solar stakeholders face a steep learning curve in securing tax credit adders. Additionally, the $7 billion “Solar for All” fund announced in April 2024 is expected to support the expansion into new state markets, even in the absence of official state programs.
By 2029, Wood Mackenzie estimates that 3.6GWdc of community solar will serve low-to-moderate income (LMI) subscribers, a significant increase from the current 829MWdc. The share of community solar capacity dedicated to LMI subscribers has grown from 2% in early 2022 to 12% by the first quarter of 2024, and is expected to reach nearly 25% by 2025 due to available tax credits and evolving state-level requirements.
“One of community solar's defining and unique benefits is its ability to deliver meaningful bill savings to small businesses and working families who need it most,” said Jeff Cramer, chief executive of the CCSA. He expressed optimism that the “Solar for All” initiative would accelerate the industry's goal of providing 4GWdc of dedicated capacity to low-income residents by 2030.
The report also notes that the top three subscriber management companies currently manage 56% of the total community solar subscribers and 71% of LMI subscribers. However, LMI subscribers are the most costly to acquire, with costs averaging $113 per kilowatt—27% higher than the average for non-LMI residential subscribers. To mitigate these costs, developers are increasingly outsourcing subscriber acquisition and management to third-party companies.
