Wood Mackenzie has released a new report exploring the impact of the Package of Beautiful Acts (HR1) on the US residential solar market. The analysis team found that canceling the Investment Tax Credit (ITC) under Article 25D would hinder short-term growth, but the long-term potential remains strong. It is expected that growth will resume after 2028.

The latest insight report by Wood Mackenzie, "Short term Challenges and Long term Potential: Evaluating the Potential Market for Household Solar Energy in the United States," points out that compared to the "business as usual" baseline scenario in the second quarter, HR1 predicts that household solar installed capacity may decrease by up to 46% by 2030. Cancelling the Household Investment Tax Credit (ITC) will make it more difficult for homeowners to afford solar energy, causing significant disruption to the market in the short term.

Many companies will no longer be able to continue operating, "said Zoe Gaston, the head of Wood Mackenzie. However, the market will eventually adapt, and the remaining participants will diversify and find ways to cut costs. In addition, the rise in retail prices will continue to make the value proposition of household solar energy more attractive

Despite these short-term challenges, the report reveals enormous long-term opportunities. It is expected that by 2050, the total addressable market (TAM) for residential solar energy will reach nearly 1500 gigawatts. This analysis uses the data of the U.S. Census Bureau and Wood Mackenzie to estimate that by 2050, there will be about 92 million self occupied single family homes in the United States. After excluding inappropriate properties and properties with existing solar installations, there will be more than 70 million new residential solar energy in the next 25 years.

Even in Wood Mackenzie's conservative 25 year low value scenario (assuming TAM penetration rate is only 12%), the market will still increase residential solar capacity by 150 gigawatts by 2050.

However, in 25 years, many things could change, including advances in technology and products, evolution of business models, and cost reductions, all of which could accelerate the growth of household solar energy, "Gaston added. We expect the final outcome to be more positive than the low value scenario we predicted