The passage of the Inflation Reduction Act (IRA) supports the growth of US renewables at an unprecedented pace. Solar, storage, and onshore wind capacity could reach more than 1,240 gigawatts (GW) over the next decade, growing 2.7 times faster than projected before the IRA took effect (Exhibit 1). The IRA is expected to stimulate domestic manufacturing of modules,
subcomponents, inverters, trackers, and more, which could alleviate material shortages that had previously restricted project installation. However, the solar industry faces significant construction and labor shortages that could worsen over the next three to five years. As solar projects grow in number and size, demand for engineering,
Exhibit 1 The projected capacity of solar, storage, and onshore wind has almost tripled, thanks to the Inflation Reduction Act.
Projections of US installed solar and wind capacity, gigawatts
Onshore wind
Storage 2
Solar PV 3
Post-IRA 1
Pre-IRA 1
1,245
617
880
+16% p.a. 4
445
75
485
+6% p.a. 4
445
413
46
375
349
341
240
225
215
553
185
73 235 135 27
73 235 135 27
165
142
37
389
54
34
44
37
34
208
165
166
155
153
150
2025
2027
2030
2032
2021
2025
2027
2030
2032
2021
1 Inflation Reduction Act. 2 Includes lithium ion and existing hydro-pumped storage. 3 Photovoltaics. 4 Per annum. Source: Inflation Reduction Act of 2022; McKinsey Power Solutions
McKinsey & Company
Accelerating the journey to net zero
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