Solar Energy: Frequently Asked Questions

Congressional research reportJan 5, 2023

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R46196

SUMMARY

Solar Energy: Frequently Asked Questions

Use of solar energy for electricity generation is growing in the United States and globally. In the

United States, solar energy overall accounted for 3.9% of total electricity generation in 2021,

compared to 0.7% in 2014.

R46196

January 5, 2023

Ashley J. Lawson,

Coordinator

Analyst in Energy Policy

Overview and Cost Considerations

The first set of questions looks at different technologies that use solar energy to generate

electricity and their costs and prevalence over time. Costs for all components of solar

photovoltaic (PV) systems—including cells, modules (also referred to as panels), inverters, and

other related equipment—have generally declined in recent years. Assessing solar energy costs

for consumers is challenging because there are many local factors to consider. Another question

considers whether using solar energy is a reliable form of electricity generation given its variable

nature.

Molly F. Sherlock

Specialist in Public Finance

Federal and State Policy Incentives

Morgan Smith

Analyst in Energy Policy

Manpreet Singh

Analyst in Industrial

Organization and Business

The second set of questions discusses federal and state policies aimed at promoting deployment

of solar energy in the United States. At the federal level, tax incentives reduce the after-tax cost

Lisa S. Benson

of investing in solar property, thereby encouraging taxpayers to invest in more solar property

Analyst in Agricultural

than they would have absent tax incentives. Federal tax incentives include an investment tax

Policy

credit for businesses, eligibility for accelerated depreciation for businesses, and a residential

energy efficient property tax credit for individuals. At the state level, renewable portfolio

standards (or, more broadly, electricity portfolio standards) require some electric utilities to

procure a specified amount of electricity from designated sources. Thirty states, three U.S.

territories, and the District of Columbia are implementing electricity portfolio standards. All of these policies include solar

energy as an eligible source. Utility-scale solar typically benefits from electricity portfolio standards, while commercial- and

residential-scale systems typically benefit from a different state policy called net metering. Net metering allows individual

electricity consumers to receive payment for the electricity produced by systems installed on their property (or, in some

cases, systems not installed on their property but with which consumers have a contractual arrangement).

Domestic Manufacturing and Jobs

Another set of questions considers the U.S. manufacturing base for solar products and U.S. tariffs, which have been applied

over the years on imports of solar equipment. The results on the nation’s solar manufacturing industry have been mixed.

Different parts of the solar PV supply chain have responded differently to the tariffs. For some components, such as the

assembly of solar panels, domestic production has increased since the imposition of tariffs. For other components, such as

solar cell production, tariffs have not had this effect. At present, there is one major domestic producer of crystalline-silicon

solar cells; several producers of solar cells have closed U.S. plants since 2012. A related question discusses the number of

U.S. jobs supported by the domestic solar industry. In 2020, the industry counted 231,574 jobs in the electricity generation

sector (over two-thirds of which were in installation and development) and about 31,050 workers in the manufacturing sector.

Land and Agricultural Considerations

The final questions address some potential environmental considerations associated with the use of solar energy, such as land

use. Standard metrics for measuring land use impacts for different energy technologies do not exist. When considering total

land area occupied, solar typically requires more land to produce the same amount of electricity than many other sources.

Other aspects of land requirements affect comparisons among energy sources, including technology developments over time,

land cover change, and the time it takes land to revert to its previous condition after a solar energy system is

decommissioned. Dual-use solar power, in which panels are installed in such a way that allows simultaneous use of the land

for another purpose, is a potential solution to some land use concerns. Examples of dual-use solar power includes rooftop

solar, aquavoltaics and floatovoltaics (solar panels associated with bodies of water), and agrivoltaics (solar panels associated

with agricultural activities). Possible effects on agricultural production are also discussed. Some farmers view solar energy

favorably as an income supplement, but others raise concerns about long-term damage to soil health and agricultural

productivity.

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Solar Energy: Frequently Asked Questions

Contents

How Does Solar Energy Work? ....................................................................................................... 1

Solar Photovoltaic (PV) ............................................................................................................ 1

Concentrating Solar Power ....................................................................................................... 3

How Much Electricity Comes from Solar Energy? ......................................................................... 3

How Much Does a Solar PV System Cost? ..................................................................................... 4

How Does Solar Energy Impact Electricity Costs for Consumers? ................................................ 8

Utility-Scale Solar ..................................................................................................................... 8

Distributed Solar ....................................................................................................................... 9

Is Solar Energy Reliable? .............................................................................................................. 10

What Federal Tax Incentives Support Solar Energy Development? ............................................. 12

Solar Manufacturing................................................................................................................ 12

Solar Deployment.................................................................................................................... 13

Tax Incentives for Businesses and Tax-Exempt Entities .................................................. 13

Tax Incentives for Individuals........................................................................................... 15

How Much Do Solar Tax Incentives Cost? ................................................................................... 15

What State Policies Support Solar Energy Development? ............................................................ 17

How Are Tariffs and Trade Restrictions Affecting Solar Imports and Domestic Solar

Manufacturing? .......................................................................................................................... 17

What U.S. Jobs Are Supported by the Solar Industry? .................................................................. 22

How Much Land Is Needed for Solar Energy? ............................................................................. 24

What Are the Potential Impacts of Solar Energy Development on Land? .................................... 26

What Is Dual-Use Solar Power? .................................................................................................... 28

What Are Potential Impacts of Solar Energy Development on Agriculture? ................................ 29

Figures

Figure 1. Crystalline-Silicon Photovoltaic (PV) Manufacturing Process ........................................ 2

Figure 2. U.S. Electricity Generation from Solar Energy, 2014-2021............................................. 4

Figure 3. Q1 2022 Benchmark U.S. Solar PV System Costs .......................................................... 6

Figure 4. Solar PV System Costs by Size and Component, 2010-2020 .......................................... 7

Figure 5. Upstream CS PV Value Chain........................................................................................ 18

Figure 6. U.S. Solar Employment Breakdown by Sector 2020 ..................................................... 23

Figure 7. Domestic PV Manufacturing.......................................................................................... 24

Figure 8. Diagram of a Floating Solar Photovoltaic System ......................................................... 29

Contacts

Author Information........................................................................................................................ 32

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Solar Energy: Frequently Asked Questions

How Does Solar Energy Work?1

The energy in sunlight can be converted into electricity in either of two ways: by using solar

photovoltaic cells or by concentrating solar energy to produce heat for electricity generation.

Solar energy can also be used to heat water for direct use, but this report focuses only on

electricity generation applications.2

Solar Photovoltaic (PV)

Sunlight can interact with certain materials to directly produce electricity in a process known as

the photovoltaic (PV) effect. Silicon (more specifically, crystalline-silicon, or c-Si) is the most

commonly used material today, but other materials (e.g., cadmium telluride) can also be used.

Research is ongoing into alternative materials and designs that might be more efficient or less

expensive than c-Si.3

To construct a PV cell to generate electricity, PV material is manufactured into ingots, which are

then cut into wafers (Figure 1). Wafers are typically 15 centimeters (cm) wide along each side

and around one-hundredth of a centimeter thick, although exact dimensions may vary by

manufacturing process.4 Wafers are processed into cells, which are then assembled into modules,

also called panels. A panel typically consists of 60 to 72 cells mounted on a plastic backing within

a frame. Panels are typically installed in groups, known as arrays, with the number of panels in

the array depending upon the available space and the desired generation capacity of the project.5

1 Ashley Lawson, Analyst in Energy Policy, authored this section.

2 Another potential direct use of solar energy under development is to use concentrated solar energy to produce

hydrogen from water, in a process called thermochemical water splitting. Hydrogen can be used in a number of energy

applications and is being studied as a zero-carbon alternative to fossil fuels such as natural gas. For more information

on hydrogen, see CRS Report R47289, Hydrogen Hubs and Demonstrating the Hydrogen Energy Value Chain, by

Martin C. Offutt.

3 For further discussion on solar PV technologies, see National Renewable Energy Laboratory (NREL), Solar

Photovoltaic Technology Basics, https://www.nrel.gov/research/re-photovoltaics.html.

4 Michael Woodhouse et al., Crystalline Silicon Photovoltaic Module Manufacturing Costs and Sustainable Pricing:

1H 2018 Benchmark and Cost Reduction Road Map, NREL, February 2019.

5 Capacity is a measure of the maximum potential output of an electricity generator, measured in watts (W). Actual

output is typically less than the maximum potential. One estimate of utility-scale solar PV systems installed in the

United States as of 2017 found that actual output ranged from 14.3% to 35.2% of the maximum potential output,

depending on a variety of system-specific factors. Mark Bolinger and Joachim Seel, Utility-Scale Solar: Empirical

Trends in Project Technology, Cost, Performance, and PPA Pricing in the United States - 2018 Edition, Lawrence

Berkeley National Laboratory (LBNL), September 2018, p. 23.

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Figure 1. Crystalline-Silicon Photovoltaic (PV) Manufacturing Process

Source: National Renewable Energy Laboratory, Crystalline Silicon Photovoltaic Module Manufacturing Costs and

Sustainable Pricing: 1H 2018 Benchmark and Cost Reduction Road Map, p. 1, February 2019.

Note: Polysilicon is the raw material processed into crystalline silicon. It accounted for 97% of global PV

production in 2018. It is the most common material currently used in PV modules (i.e., panels).

A PV system includes panels and a variety of structural and electronic components, known as

balance of system (BOS) equipment, to tie the system together.6 Structural BOS equipment

includes brackets, on which the panels are mounted. For ground-mounted systems, these brackets

can be either fixed or able to rotate during the day to face the sun. Mounting systems that can

rotate are known as tracking systems. Panels mounted on tracking systems tend to generate more

electricity than panels on fixed-mount systems, all else being equal, because the tracking systems

can optimize the amount of sunlight hitting the panel over the course of a day.7 One key piece of

BOS equipment is an inverter, an electronic device that converts the electricity generated by PV

panels into a form that is usable in the U.S. electric system. Other electronic BOS equipment

includes charge controllers, circuit breakers, meters, and switch gear. Some PV systems also

include integrated energy storage systems such as batteries.8

PV systems can be divided into three categories, based primarily on capacity.9



Utility-scale systems (i.e., solar farms) may range in capacity from a few

megawatts (MW) to a few hundred MW. They are typically owned and operated

like other central power plants. Utility-scale projects are typically connected to

the electricity transmission system (i.e., the network of high-voltage lines that

move electricity over long distances).

Commercial-scale systems typically range in capacity from a few kilowatts (kW;

1,000 kW = 1 MW) to a few hundred kW. They may be installed on the ground

or on rooftops, and are typically owned or hosted by commercial, industrial, or

institutional entities. Some may be connected to the transmission system, and

some may be connected to the electricity distribution system, the network of lowvoltage lines that deliver electricity directly to most consumers.

6 Balance of system (BOS) equipment is sometimes called balance of plant (BOP) equipment.

7 Generally, tracking systems can be installed only on ground-mounted systems. In other words, rooftop systems do not

typically include tracking systems.

8 For a discussion of energy storage systems, see CRS Report R45980, Electricity Storage: Applications, Issues, and

Technologies, by Richard J. Campbell.

9 This report provides illustrative capacity thresholds because the industry does not have established capacity

thresholds. For example, some analysis defines 1 MW as the minimum size for utility-scale projects, while other

analysis uses 5 MW. Also, the industry has not reached consensus on whether capacity is the best metric for

categorizing projects. This report uses capacity for consistency with the data shown throughout. Other analyses may

define utility-scale projects based on agreements for how the electricity will be purchased (e.g., power purchase

agreement versus net metering). Another option is to use total project cost as the defining characteristic. See Mark

Bolinger and Joachim Seel, September 2018.

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

Residential-scale systems typically have generation capacity of a few kW. Most

residential-scale projects are installed on rooftops and connected to the

distribution system.

Another way to categorize PV systems is by ownership model. Systems connected to the

transmission system (typically utility-scale) are generally owned by utilities or independent

power producers, as is the case for other central power plants. Smaller systems may use other

ownership models, depending on what applicable state laws allow.



Customer-owned systems are owned directly by the electricity consumer

benefiting from the system. The consumer might buy the system outright or

finance it in the same way as for other property improvements (e.g., loan).

Third-party ownership (i.e., solar leasing) is an ownership model in which an

electric consumer, such as a homeowner, allows a company to build a solar

system on the consumer’s property. The company owns and maintains the solar

system while the consumer uses the electricity produced by the system. The

consumer pays back the cost of the system to the company through either lease

payments or a power purchase agreement.

Community solar (i.e., solar gardens) is an ownership model in which multiple

electricity consumers may purchase or lease shares of a solar system through a

subscription. Subscribers can benefit from the project by receiving electricity,

financial payments, or both. Community solar systems are usually not installed

on a subscriber’s property, and the systems may be owned by a utility or another

type of entity.

Concentrating Solar Power

Concentrating solar power (CSP) technologies collect and concentrate energy from sunlight to

heat certain fluids (liquids or gases). CSP plants use these heated fluids to produce electricity,

either by creating steam to drive a steam turbine or by directly running a generator. CSP plants

can be designed with thermal energy storage systems, which allow the plant to produce electricity

when the sun is not shining.10 At least one CSP plant with storage operating in the United States is

capable of generating electricity 24 hours a day.11 Most U.S. and international solar energy

development focuses on PV technology.

How Much Electricity Comes from Solar Energy?12

Electricity generation from solar energy has grown in recent years, as shown in Figure 2. Solar

energy overall (PV and CSP combined) accounted for 0.7% of total U.S. electricity generation in

2014, rising to 3.9% of the total in 2021, according to data from the U.S. Energy Information

Administration (EIA).13 Most generation (98% in 2021) from solar energy comes from PV

10 For an overview, see DOE, Concentrating Solar Power Thermal Storage System Basics, August 21, 2013.

11 One example is reported in Thomas W. Overton, “Top Plant: Crescent Dunes Solar Energy Project, Tonopah,

Nevada,” Power Magazine, December 1, 2016, https://www.powermag.com/crescent-dunes-solar-energy-projecttonopah-nevada-2/.

12 Ashley Lawson, Analyst in Energy Policy, was the author of this section.

13 CRS analysis of data from EIA, “Electricity Data Browser,” accessed July 11, 2022, https://www.eia.gov/electricity/

data/browser/. EIA began collecting data on generation from small-scale solar PV sources, defined by EIA as

installations with capacity less than 1 MW, in 2014. The EIA statistics reported in this report include solar sources

above and below this threshold.

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Solar Energy: Frequently Asked Questions

systems. Large-scale systems, defined by EIA as those greater than 1 MW, accounted for 61% of

overall generation from solar energy in 2014, the first year for which EIA reported generation

data for different size categories. By 2021, the share from large-scale systems had increased to

70%.

Figure 2. U.S. Electricity Generation from Solar Energy, 2014-2021

Generation in GWh and as Percent of Total U.S. Electricity Generation

Source: U.S. Energy Information Administration (EIA), Electric Power Annual 2018, 2019.

Notes: GWh = gigawatt-hours. Bars are labeled with the percent of total U.S. generation from solar energy

overall (large-scale and small-scale combined) in that year. Large-scale solar generation includes photovoltaic and

concentrating solar power technologies. EIA defines large-scale generation as generators with capacity > 1 MW,

and small-scale generation as generators with capacity < 1 MW. EIA began reporting generation data for smallscale solar generators in 2014.

How Much Does a Solar PV System Cost?14

Costs for solar PV systems vary by size, as shown in Figure 3. The figure shows an estimate of

average cost of installing a U.S. solar PV system per unit of capacity, as of the first quarter of

2022 (Q1 2022), based on an analysis by the Department of Energy’s National Renewable Energy

Laboratory (NREL). Costs for any individual project could differ based on project-specific

circumstances. NREL’s estimated costs are not the price customers pay for systems (i.e., the

14 Ashley Lawson, Analyst in Energy Policy, was the author of this section.

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Solar Energy: Frequently Asked Questions

estimates do not account for tax credits, other incentives, or financing costs). Two general

findings from NREL’s analysis are supported by numerous other studies, namely that larger

projects tend to be cheaper on a per-unit basis, and that costs for projects of all sizes have

declined in recent years.

Utility-scale systems have the lowest per-unit costs, at $0.99 per watt of direct current

(hereinafter, W) in Q1 2022.15 Benchmark commercial-scale systems cost $1.84/W or $1.94/W in

Q1 2022, depending on if they were installed on commercial rooftops or the ground, respectively.

Benchmark residential-scale systems cost $2.95/W in Q1 2022. Adding storage increased the perunit costs for systems of all sizes. The total system cost differences shown in Figure 3 are driven

primarily by higher “soft costs.” These costs include, for example, costs associated with

permitting, interconnecting with the grid, and installer overhead costs. The soft costs are much

higher for smaller-scale systems, per watt, than for utility-scale systems, which benefit from

economies of scale.

15 Solar PV systems produce direct current (DC) electricity, which must be converted to alternating current (AC)

electricity for use. Some power is lost during this conversion process, so the same system will have a different capacity

rating (i.e., size) depending on whether it is reported as DC or AC.

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Figure 3. Q1 2022 Benchmark U.S. Solar PV System Costs

Source: Vignesh Ramasamy et al., U.S. Solar Photovoltaic System and Energy Storage Cost Benchmarks, with Minimum

Sustainable Price Analysis: Q1 2022, NREL, September 2022.

Notes: DC = direct current; BOS = balance of system; 2021$ = 2021 dollars. Labels show total system costs.

Costs are for solar PV systems without energy storage. Prices that customers pay for systems may be different

than estimated costs, especially if tax credits or other policy incentives are available.

PV system costs declined from 2010 to 2020, as shown by data from a 2021 NREL analysis of

systems of different size and components (Figure 4).

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Figure 4. Solar PV System Costs by Size and Component, 2010-2020

2019$ per Watt DC

Source: NREL, “Documenting a Decade of Cost Declines for PV Systems,” February 2021.

Notes: DC = direct current; 2019$ = 2019 dollars. PII = permitting, inspection, and interconnection; BOS =

balance of system. Prices that customers pay for systems may be different than estimated costs, especially if tax

credits or other policy incentives are available. NREL changed its modeling approach before its analysis of

calendar year 2020 data. The dark blue bars indicate how this methodological change affected cost estimates.

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How Does Solar Energy Impact Electricity Costs for

Consumers?16

Utility-scale solar and distributed solar (commercial or residential) have different cost impacts for

consumers. At a high level, utility-scale cost impacts can be considered in the same way as other

power plants and affect all consumers within a utility service territory equally. In contrast,

distributed solar cost impacts are more similar to energy efficiency improvements in that they

primarily affect costs for the consumer using the distributed solar resource.17

Utility-Scale Solar

In parts of the country, new utility-scale solar PV systems are among the least-cost options for

generating electricity.18 This was not generally the case a few years ago but has been driven by

the cost declines for solar shown in Figure 4.

One way to compare costs for different power plants is the levelized cost of electricity (LCOE,

also called levelized cost of energy). LCOE is a measure of the cost of generating electricity from

a given type of power plant over its lifetime. It can also be thought of as the amount of revenue a

power plant would require to fully cover its costs. LCOE estimates attempt an “apples-to-apples”

comparison among generation options, typically accounting for all construction and installation

costs (such as those shown in Figure 3), plus operation, maintenance, and fuel costs over the

lifetime of power plants. LCOE estimates may include financing costs as well. They typically

account for the amount of electricity power plants are expected to generate over their lifetimes.

LCOE estimates are normalized per unit of electricity (e.g., dollars per megawatt-hour) and

expressed in net present value terms. LCOE estimates do not reflect all costs associated with

building new power plants. In particular, indirect costs are not included in LCOE. Indirect costs

might include transmission system expansions or network upgrades that might be required to

bring new power plants online. Additionally, LCOE estimates do not include operational

constraints such as reliability requirements that may be especially important considerations for

solar, given its unique nature (see additional discussion in “Is Solar Energy Reliable?”). LCOE

estimates sometimes include the effect of tax credits or other policy incentives.

Several organizations estimate LCOE. One commonly cited estimate is from the energy firm

Lazard. As of 2021, Lazard estimates that new U.S. utility-scale solar has LCOE ranging from

$28 to $41 per MWh (before accounting for tax credits).19 For comparison, Lazard estimates the

next lowest-cost LCOE for new power plants is for land-based wind, ranging from $26/MWh to

16 Ashley Lawson, Analyst in Energy Policy, was the author of this section.

17 As is also true for energy efficiency, some community-level cost impacts (increase or decreases) could occur when

an individual consumer adds distributed solar generation. These impacts are negligible at low levels of solar penetration

but can be meaningful when high levels of distributed solar generation are developed in an area. Additional discussion

of these potential cost impacts is available in CRS Report R46010, Net Metering: In Brief, by Ashley J. Lawson.

18 The costs for developing utility-scale solar vary across the country depending upon solar resource quality, land and

labor costs, and other factors. State policies can also influence costs as well. For example, state renewable portfolio

standards (discussed in this report) can effectively lower the cost of developing solar by providing policy certainty and

an additional revenue stream to utility-scale projects. On the other hand, state or local permitting or siting restrictions

can create hurdles to project development, effectively increasing costs. For example, multiple counties in Ohio have

banned most utility-scale solar (and wind) energy development under authority of a state law passed in 2021. John

Fitzgerald Weaver, “Ten Ohio Counties Have Banned Large Scale Wind and Solar,” PV Magazine, August 24, 2022.

19 Lazard, Lazard’s Levelized Cost of Energy Analysis, Version 15.0, October 2021.

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$50/MWh. Lazard estimates that the lower end of the range for solar (and wind) is less expensive

than generating electricity from existing nuclear ($29/MWh) or coal ($42/MWh) power plants.

All else being equal, generation from power plants with lower LCOE should lead to lower

electricity prices. For solar, LCOE estimates suggest that an increased use of solar energy would

lower electricity prices because of solar’s lower LCOE.20 This has been observed for wholesale

electricity prices, though the effect is modest under current deployment rates. Wholesale

electricity prices have declined in recent years but largely because of lower U.S. natural gas

prices.21 In states with carbon pricing policies in place, solar energy development could reduce

the potential for cost increases arising from the carbon price.22

The downward pressure that utility-scale solar energy puts on electricity prices has a limit. At

some level of solar penetration (5% or so, based on observations in California), adding more solar

has a diminishing effect on electricity prices.23 This is largely because solar panels produce

energy when the sun is shining, which is not necessarily when more electricity generation is

needed. An area with a relatively high penetration of solar might have excess generation during

mid-day, and adding more solar capacity would not change electricity supply or demand (or

prices) then. The electricity grid sometimes needs upgrades or expansions to access utility-scale

solar, which can potentially put upward pressure on electricity prices.

Distributed Solar

What consumers pay for electricity is influenced by the rate they pay—that is, how many cents

per kilowatt-hour (kWh) of usage—and how much they use. Utility-scale solar can affect

electricity rates, while distributed solar primarily affects how much electricity consumers buy

from the grid.

Distributed solar can be installed at the point of use, namely a home, business, or other building.

In these cases, the onsite solar panels generate electricity that is used in the building, reducing the

need to buy electricity from the local utility. Some consumers may be eligible for net metering

arrangements with their utilities, which compensate them for any excess electricity their panels

produce (i.e., electricity the customers do not use themselves).24 Net metering compensation

reduces bills above and beyond the effect of buying less electricity.

Community solar (sometimes called solar gardens) is another form of distributed solar. The U.S.

Department of Energy (DOE) defines community solar as “any solar project or purchasing

program, within a geographic area, in which the benefits of a solar project flow to multiple

20 Policy incentives, such as federal tax credits, can lower utilities’ costs for procuring electricity from solar PV systems

beyond what is reflecting in the LCOE estimates provided in this report. Policy incentives may have the effect of

making solar energy a more attractive investment option beyond what favorable LCOE comparisons would suggest.

21 Researchers at Lawrence Berkeley National Lab estimated that wind and solar contributed less than $3/MWh to the

observed decline in electricity prices between 2008 and 2017, compared to $7-$53/MWh contributed by natural gas.

Andrew D. Mills et al., “The Impact of Wind, Solar, and Other Factors on the Decline in Wholesale Power Prices in the

United States,” Applied Energy, vol. 238 (February 1, 2021), p. 116266.

22 As of the cover date of this report, carbon pricing policies are in effect in California and in the states participating in

the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program that covers carbon dioxide emissions from

electric power. The number of RGGI states has changed in recent years. For more details on the RGGI program and its

participating states, see https://www.rggi.org/. In addition, Washington State established cap-and-trade program that is

scheduled to start in 2023 (https://ecology.wa.gov/Air-Climate/Climate-Commitment-Act/Cap-and-invest).

23 Andrew D. Mills et al., Solar-to-Grid: Trends in System Impacts, Reliability, and Market Value in the United States

with Data Through 2019, Lawrence Berkeley National Lab, February 2021.

24 For an overview of net metering policies, see CRS Report R46010, Net Metering: In Brief, by Ashley J. Lawson.

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customers such as individuals, businesses, nonprofits, and other groups.”25 Typically, a consumer

can subscribe to a community solar project (through upfront payments or ongoing subscription

fees) for a share of the project’s output. The local utility lowers the consumer’s bill based upon

the amount of electricity generated and the consumer’s share of the project. Community solar

projects are not necessarily installed at the point of use, making them an option for the estimated

49% of households that do not live in buildings suitable for rooftop solar.26 In general, state laws

set community solar rules, and not all states allow them.27 As of the end of 2020, about 72% of

community solar capacity was installed in four states: Minnesota, Florida, Massachusetts, and

New York.28 The Biden Administration set a goal of expanding community solar capacity from 3

gigawatts (GW) in 2020 to 20 GW in 2025.29

Like utility-scale solar, grid upgrades are sometimes required to support new distributed solar

installations. In many cases, individual consumers may be required to pay for any upgrades, and

those added costs can discourage development. Some states are exploring options to address these

situations.30

Is Solar Energy Reliable?31

One potential reliability concern for solar energy is due to its variable nature, dependent on the

availability of sunlight.32 For example, solar PV systems cannot produce electricity at night, and

their output can vary during the day depending on local weather conditions (e.g., cloudiness). The

physical requirements of the electricity system are such that the supply and demand of electricity

must equal each other at all times. Currently, to ensure reliability, other sources of electricity

generation are used when solar energy is not available. Expanding other types of electricity

system infrastructure, such as transmission lines or energy storage assets, could also address this

limitation and expand the use of solar energy into less sunny times of day. Alternatively, policies

and regulatory frameworks that incent greater electricity consumption during daytime hours and

less at night (i.e., load shifting) could help address solar energy’s variability.

Another potential reliability concern for solar energy arises from the mismatch between the hours

of the day when generation from solar energy peaks (typically midday) and when electricity

25 DOE, “Community Solar Basics,” accessed September 15, 2022.

26 Residential buildings are considered unsuitable for solar if they (1) are rented, (2) are at least four stories tall, or (3)

have roofs too small for a 1.5 kilowatt PV system. David Feldman et al., Shared Solar: Current Landscape, Market

Potenial, and the Impact of Federal Securities Regulation, NREL, April 2015.

27 As of February 2021, 23 states and the District of Columbia had adopted community solar policies, and three

additional states had adopted policies providing community solar as an option. DSIRE Insight, “Community Solar

Policy Update: States Exploring Low-Income Access and New Program Models,” February 25, 2021. Even in states

without community solar policies, publicly owned utilities (which are generally self-regulated and not subject to state

jurisdiction) may implement community solar programs.

28 Jenny Heeter, Kaifeng Xu, and Gabriel Chan, Sharing the Sun: Community Solar Deployment, Subscription Savings,

and Energy Burden Reduction, NREL, July 2021.

29 DOE, “About the National Community Solar Partnership,” accessed September 15, 2021, https://www.energy.gov/

communitysolar/about-national-community-solar-partnership.

30 For a discussion of grid upgrade costs and state responses, see Erica McConnell and Laura Beaton, Sharing the

Burden and the Benefits: The Quandary of Allocation DER Interconnection Costs, Interstate Renewable Energy

Council, December 20, 2017.

31 Ashley Lawson, Analyst in Energy Policy, was the author of this section.

32 For further discussion see CRS In Focus IF11257, Variable Renewable Energy: An Introduction, by Ashley J.

Lawson.

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demand peaks (typically several hours later). To maintain reliability, some sources of electricity

have to quickly increase their output to account for the simultaneous drop-off in output from solar

generators and increase in demand. As more solar systems are installed, the need for other sources

that can quickly change output levels typically increases. This situation is often referred to as the

“duck curve” because the shape of the plot showing the difference between demand and output

from solar generators resembles a duck.33 Not all electricity generators are capable of quickly

changing their output, and their deployment may not match the levels of deployment of solar

generators. Load shifting, operational changes to non-solar sources, and deployment of more

flexible resources (e.g., energy storage) are all possible ways to address the duck curve. Some

analysis suggests that electric vehicle deployment might also act as a form of load shifting and

address the duck curve if vehicle charging occurs when output from solar sources is high.34

A third potential reliability concern comes from the fact that solar PV produces direct current

(DC) electricity. Conventional generators produce alternating current (AC) electricity, and the

grid is optimized for AC. An inverter is an electrical device that converts DC to AC; gridconnected solar PV systems require an inverter. For this reason, solar is sometimes referred to as

an “inverter-based resource.”35 Generators that produce AC also inherently contribute to grid

reliability by providing what are known as “essential reliability services” or “ancillary services.”36

Most of these services arise from the way generators physically respond to changes in the balance

of electricity supply and demand over fractions of seconds. Inverter-based resources do not

inherently provide these services, although inverters can be designed (and are being deployed) to

provide some of these services.

The electric power industry and its federal and state regulators have been studying ways to

protect system reliability from the unique nature of inverter-based resources since at least 2008.

Additionally, Congress has funded a variety of research programs related to electric reliability.37

No widespread reliability issues due to solar appear to have occurred to date, though some local

reliability issues have been reported.38

33 This mismatch and potential reliability concern have been recognized since at least 2008, but the term “duck curve”

was popularized by a 2013 analysis by the California Independent System Operator (CAISO). NREL, Ten Years of

Analyzing the Duck Chart, February 26, 2018.

34 Julia Pyper, “Electric Ridesharing Benefits the Grid, and EVgo Has the Data to Prove It,” Greentech Media, May 9,

2019, https://www.greentechmedia.com/articles/read/electric-ridesharing-benefit-the-grid-evgo.

35 Batteries and wind turbines are also inverter-based resources. Wind turbines do produce AC, but the quality is

insufficient for the grid, so electricity from wind turbines is typically first converted to DC, then converted back to AC

and delivered to the grid.

36 Essential reliability services include inertia, frequency response, and voltage control. For more information about

these services, and the physical factors underlying them, see Federal Energy Regulatory Commission, Reliability

Primer, 2016.

37 Some examples are provided in CRS Report R45764, Maintaining Electric Reliability with Wind and Solar Sources:

Background and Issues for Congress, by Ashley J. Lawson.

38 For example, in 2016, a solar farm in Southern California stopped production after a wildfire caused a disturbance at

another part of the electricity transmission system. Analysis of the event showed that the inverter’s design was

responsible for the loss of power. Changes made since the event are meant to prevent similar occurrences in the future,

but the event highlights how system operators are still evolving in their approach to maintaining reliability as solar

energy is deployed to a larger extent. See North American Electric Reliability Corporation, 1,200 MW Fault Induced

Solar Photovoltaic Resource Interruption Disturbance Report, June 2017.

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What Federal Tax Incentives Support Solar Energy

Development?39

Various provisions in the Internal Revenue Code (IRC) support investment in solar energy. P.L.

117-169, commonly referred to as the Inflation Reduction Act of 2022 (IRA), modified,

expanded, and extended existing tax provisions supporting solar investment and deployment.40

The IRA provided additional funding for solar manufacturing tax credits while also creating a

new tax credit for solar component manufacturing. Tax credits for solar manufacturing are

broadly intended to increase the availability of domestically made components.41 Domestic

manufacturing as a policy objective is also supported by domestic content elements in tax

incentives supporting deployment.

Solar Manufacturing

The IRA included two tax provisions designed to support solar (and other forms of energy)

manufacturing. First, the IRA provided $10 billion in advanced energy manufacturing tax credit

allocations under IRC Section 48C. The Internal Revenue Service (IRS) is to establish a program

to allocate these credits.42 The IRS previously allocated $2.3 billion in advanced energy

manufacturing tax credits that were provided in the American Recovery and Reinvestment Act of

2009 (P.L. 111-5). Many of the earlier advanced energy manufacturing tax credits were allocated

for solar-related activities, including solar PV components and materials, CSP technologies, and

related equipment such as inverters.43

Taxpayers can request tax credit allocation under the IRA for investments in projects that reequip,

expand, or establish certain advanced energy manufacturing facilities.44 This includes

manufacturing facilities designed to generate energy from the sun, as well as electric grid

modernization equipment and components to support the transmission of intermittent sources of

renewable energy.45 The base rate for the credit allocated under the IRA is 6%, with a 30% credit

rate allowed for projects that pay prevailing wages and meet registered apprenticeship

requirements. Of the $10 billion for allocations provided in the IRA, at least $4 billion are to be

39 Molly F. Sherlock, Specialist in Public Finance, was the author of this section.

40 Tax incentives for solar energy property were first enacted in 1978. Subsequently, tax incentives for solar have been

extended and modified, most recently in the IRA. For a legislative history of the solar investment tax credit, see CRS In

Focus IF10479, The Energy Credit or Energy Investment Tax Credit (ITC), by Molly F. Sherlock. For a legislative

history of the tax credit for individuals purchasing residential solar, see Appendix B in CRS Report R42089,

Residential Energy Tax Credits: Overview and Analysis, by Margot L. Crandall-Hollick and Molly F. Sherlock.

41 Marie Sapirie, “Powering Up Advanced Manufacturing,” Tax Notes Federal, September 26, 2022, pp. 1967-1969.

42 The IRS is directed to establish a program to certify projects and allocate credits by February 12, 2023.

43 Taxpayers receiving allocations were publicly disclosed. Recipients of first round allocations were disclosed in

January 2010. See The White House, “Fact Sheet: $2.3 Billion in New Clean Energy Manufacturing Tax Credits,”

press release, January 8, 2010, https://obamawhitehouse.archives.gov/the-press-office/fact-sheet-23-billion-new-cleanenergy-manufacturing-tax-credits.

44 Tax-exempt organizations, including state and local governments and electric cooperatives, may be able to receive

credit amounts as direct payments.

45 Selection criteria for projects are to include commercial viability; potential for domestic job creation; impact on air

pollution or greenhouse gas emissions; potential for technological innovation and commercial deployment; levelized

cost for energy generation, storage, or conservation; and the project’s expected time frame. Applicants accepting

certifications for credits will have two years to provide evidence that the requirements of the certification have been

met and to place property in service.

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allocated to projects in energy communities and not located in census tracts in which projects

having received prior allocations under Section 48C are located.46

The second provision is a new tax credit for solar component manufacturing.47 Beginning in 2023

and through 2032, taxpayers may be able to claim tax credits for the production and sale of

qualifying solar components.48 The amount of the credit is generally determined based on the

particular component produced. (See Figure 1 for an overview of the solar manufacturing

process.) Credit amounts for solar components are (1) for a thin-film PV cell or crystalline PV

cell, 4 cents per direct current watt of capacity; (2) for PV wafers, $12 per square meter; (3) for

solar grade polysilicon, $3 per kilogram; (4) for polymeric backsheet, 40 cents per square meter;

and (5) for solar modules (i.e., panels), 7 cents per direct current watt of capacity.

Solar Deployment

Tax Incentives for Businesses and Tax-Exempt Entities

Tax incentives for some energy sources, including solar, were expanded and extended in the

IRA.49 Investments in certain renewable energy property, including solar, qualify for an

investment tax credit (ITC).50 The amount of the credit is determined as a percentage of the

taxpayer’s basis in eligible property. (Generally, the basis is the cost of acquiring or constructing

eligible property.) For solar energy property placed in service after December 31, 2021, the base

credit amount is 6%. This base amount is multiplied by five (i.e., increased to 30%) for projects

that satisfy prevailing wage and apprenticeship requirements or have a maximum net output of

less than one MW of electrical or thermal energy.51

Taxpayers may qualify for additional credit amounts for projects that include domestically

produced property or are located in qualifying geographic areas. Specifically:



A domestic content bonus credit is available for projects that certify that certain

steel, iron, and manufactured products used in the facility were domestically

produced.52 The bonus credit amount is two percentage points, increased to 10

percentage points for projects that meet wage and apprenticeship requirements.

46 An energy community is defined as being a brownfield site; an area that has or had certain amounts of direct

employment or local tax revenue related to oil, gas, or coal activities and has an unemployment rate at or above the

national average; or a census tract or any adjoining tract in which a coal mine closed after December 31, 1999, or in

which a coal-fired electric power plant was retired after December 31, 2009.

47 IRC §45X.

48 Tax-exempt organizations, including state and local governments and electric cooperatives, may be able to receive

credit amounts as direct payments. Taxpayers who are not tax-exempt entities are allowed to elect direct pay for the

advanced manufacturing production credit for the first five years starting with the year a facility is placed in service.

The credit phases out for components sold after December 31, 2029. Components sold in 2030 will be eligible for 75%

of the full credit amount. Components sold in 2031 and 2032 will be eligible for 50% and 25% of the full credit

amount, respectively. No credits will be available for components sold after December 31, 2032.

49 For an overview of tax provisions in the IRA, see CRS Report R47202, Tax Provisions in the Inflation Reduction Act

of 2022 (H.R. 5376), coordinated by Molly F. Sherlock. For an overview of climate-related provisions in the IRA, see

CRS Report R47262, Inflation Reduction Act of 2022 (IRA): Provisions Related to Climate Change, coordinated by

Jane A. Leggett and Jonathan L. Ramseur.

50 IRC §48.

51 Solar energy property qualifies for the 30% credit automatically if construction begins before 60 days after the

Secretary of the Treasury publishes guidance on the wage and registered apprenticeship requirements.

52 CRS Insight IN11983, Proposed Tax Preference for Domestic Content in Energy Infrastructure, by Christopher D.

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

Projects located in energy communities may qualify for an increased credit

amount of two percentage points, increased to 10 percentage points for projects

that meet wage and apprenticeship requirements.53



The IRS has been directed to establish a program to allocate 1.8 gigawatts for

“environmental justice solar and wind capacity” credits in each of calendar years

2023 and 2024.54 Taxpayers receiving capacity allocations may be entitled to tax

credits in addition to otherwise allowed ITCs. Specifically, projects located in

low-income communities or on Indian land receiving allocations can claim a 10

percentage point bonus ITC. Projects that are part of low-income residential

building projects or qualified low-income economic benefit projects can claim a

20 percentage point bonus ITC.

Starting in 2023, tax-exempt organizations, including state and local government and electric

cooperatives, may be able to receive credit amounts as direct payments. In other words, entities

that do not pay taxes may be able to receive the credit amount as payments. In 2024, the amount

of the credit that can be received as direct pay will be limited to 90% for large facilities not

meeting domestic content requirements. The Treasury Secretary can waive this limit if materials

are not available domestically or if including domestic materials would increase the facility’s

construction cost by more than 25%. A taxpayer can elect a one-time transfer of all or a portion of

the tax credit. This option may be attractive to taxpayers with limited tax liability, as the taxpayer

may be able to transfer his or her credit in exchange for a payment.

Taxpayers may claim the production tax credit (PTC) for electricity produced using qualifying

solar energy property that was placed in service after 2021 if an ITC was not claimed for that

same property. The PTC can be claimed for electricity produced at a qualifying facility during its

first 10 years in operation. The credit amount is 1.3 cents per kWh (in 1993 dollars) adjusted

annually for inflation. In 2022, the PTC was 2.6 cents per kWh for solar projects that qualify for

this amount. Similar to the ITC, larger projects must pay prevailing wages and meet registered

apprenticeship requirements to claim this credit amount, with the credit amount one-fifth of this

value otherwise. Similar to the ITC, there are bonus amounts that can be added to the PTC for

projects meeting domestic content requirements and facilities located in energy communities.

Beginning in 2024, solar energy facilities may be eligible for new clean electricity tax credits.

Taxpayers can claim these credits either for investment in zero-emissions electricity generation

facilities or for the production of zero-emissions electricity at qualifying facilities. Similar to the

ITC and PTC above, limited credits are available for larger facilities that do not pay prevailing

wages or meet registered apprenticeship requirements, and bonus credit amounts are available for

projects in energy communities or facilities that meet domestic content requirements. After 2024,

there is an annual allocation of 1.8 gigawatts in environmental justice solar and wind capacity

credits, similar to what is available in 2023 and 2024. The clean electricity credits are scheduled

to phase out when emissions reduction target levels are achieved or after 2032 (the later of the

two).55

Watson and Molly F. Sherlock.

53 See footnote 46 for the energy community definition.

54 Qualifying solar facilities include those with a nameplate capacity of 5 MW or less. Qualifying property can include

energy storage property installed in connection with the solar property and interconnection property.

55 The emissions target phaseout is scheduled to begin after the calendar year in which greenhouse gas emissions from

the electric power sector are equal to or less than 25% of 2022 electric power sector emissions. Once phaseout begins,

the full credit amount will remain available for facilities that begin construction the following year. The credit amount

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Special provisions in the tax code allow solar energy property to be depreciated over a shorter

period of time than would normally be the case.56 Specifically, solar energy property is classified

as five-year property in the Modified Accelerated Cost Recovery System (MACRS).57

Temporarily, through 2022, certain investments in solar energy property are eligible for 100%

bonus depreciation.58 This eligibility means that for these investments, the expense can be

deducted immediately (i.e., expensed). Bonus depreciation is scheduled to phase down after 2022.

It is scheduled to decrease to 80% in 2023, 60% in 2024, 40% in 2025, and 20% in 2026, before

being 0% in 2027. Bonus depreciation may be claimed for new as well as used property.

Regulated public utilities cannot claim bonus depreciation. Tax-exempt organizations, such as

electric cooperatives, also cannot claim bonus depreciation.

Tax Incentives for Individuals

Individuals purchasing solar energy property may qualify for the residential energy-efficient

property credit.59 Through 2032, the tax credit for individuals is 30% of the cost of solar electric

property installed on the taxpayer’s residence.60 The tax credit rate is scheduled to be 26% in

2033 and 22% in 2034, with the credit expiring after 2034.61 The tax credit is nonrefundable,

meaning that the amount of the credit a taxpayer can claim in the tax year is limited to the

taxpayer’s income tax liability. However, unused tax credits can be carried forward to the

following tax year.

How Much Do Solar Tax Incentives Cost?62

Tax expenditure estimates are one source of information on the “cost” of solar tax incentives. Tax

expenditures are, by definition, the amount of forgone revenue associated with special provisions

in the tax code, such as tax credits and accelerated cost recovery. For FY2021, the Joint

Committee on Taxation (JCT) estimates that the amount of forgone revenue associated with the

business ITC for solar was $7.4 billion.63 The amount of forgone revenue associated with the

residential energy-efficient property credit for FY2021 was an estimated $1.0 billion, although

for facilities beginning construction in the second year will be 75% of the full credit amount. This will be reduced to

50% for facilities beginning construction in the third year and zero afterward.

56 Generally, assets used in the production of electricity are recovered over a 20-year period. See IRS Publication 946

(2018), “How to Depreciate Property,” available at https://www.irs.gov/publications/p946.

57 IRC §168(e)(3)(B). The depreciable basis (the amount that is recovered through depreciation deductions over time)

of solar energy property is reduced by 50% of any ITC claimed. Thus, if a 30% ITC was claimed on a $1 million

investment in solar energy property, $850,000 would be depreciated under the schedule for five-year MACRS property.

Accelerating depreciation reduces the after-tax cost of investing in solar energy property.

58 The 2017 tax revision (P.L. 115-97, commonly referred to as the Tax Cuts and Jobs Act) included a temporary 100%

bonus depreciation for qualified assets bought and placed in service between September 28, 2017, and December 31,

2022. This provision is not unique to solar, but it nonetheless reduces the after-tax cost of making investments in solar

energy property. For more information on bonus depreciation generally, see CRS Report RL31852, The Section 179

and Section 168(k) Expensing Allowances: Current Law and Economic Effects, by Gary Guenther.

59 IRC §25D.

60 A taxpayer’s residence includes any dwelling unit used as a residence by the taxpayer. It is not limited to property

installed on the taxpayer’s primary residence, so tax credits can be claimed for solar energy property installed on

second or vacation homes.

61 The tax credit for solar panels was reduced to 26% in 2020 and 2021 before being increased back to 30% in the IRA.

62 Molly F. Sherlock, Specialist in Public Finance, was the author of this section.

63 JCT, Estimates of Federal Tax Expenditures for Fiscal Years 2020–2024, JCX-23-20, November 5, 2020, p. 25.

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the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Division EE of P.L. 116-260) later

extended this provision, with the extension estimated to reduce federal revenue by $0.3 billion in

FY2021.64 The figures for the residential tax credits includes all eligible technologies and are not

strictly for solar.65 The revenue loss for five-year MACRS for all eligible energy property

(primarily wind and solar, but other technologies are eligible) is estimated at less than $50 million

in FY2021. Because bonus depreciation is not a solar- or even energy-specific provision, a tax

expenditure estimate for bonus depreciation for solar is not available.

IRS data also provide information on individual claims of tax credits for solar electric property.66

In 2019, an estimated 517,664 individuals filed tax returns that claimed the residential energyefficient property credit for solar electric property.67 The total cost of solar electric property for

which tax credits were claimed was $10.4 billion, generating approximately $3.1 billion in

individual income tax credits.68

The IRA’s expanded and modified tax credits for clean energy are expected to reduce federal

revenues, with the JCT estimating the budgetary effect for the FY2022-FY2031 period.69 The

JCT’s estimates apply to all technologies eligible for a provision and are not specific to solar. The

IRA’s modification and extension of the ITC is estimated to reduce federal revenues by $14.0

billion, while the new clean electricity ITC is expected to reduce federal revenues by an

additional $50.9 billion. Extending the five-year cost recovery period in the IRA, which includes

solar and other technologies, is estimated to reduce federal revenue by $0.6 billion. The extension

and modification of the residential energy efficient property, which can be claimed for residential

solar panel installations, is expected to reduce federal revenue by $22.0 billion over the 10-year

budget window. As discussed above, taxpayers investing in or engaged in solar manufacturing

may also be able to claim federal tax credits for these activities. The estimated reduction in

federal tax revenues due to the advanced energy manufacturing tax credit in the IRA is $6.3

billion, while the reduction in revenue due to the advanced manufacturing production credit is

$30.6 billion.

64 The business ITC was also extended in P.L. 116-260, but there was not estimated to be a FY2021 fiscal impact for

that extension. See JCT, Estimated Budget Effects of the Revenue Provisions Contained in Rules Committee Print 11668, the “Consolidated Appropriations Act, 2021,” JCX-24-20, December 21, 2020.

65 Taxpayers can also claim the residential energy-efficient property credit for solar water heating, small wind energy,

geothermal heat pump, and fuel cell property. While most of this was due to solar energy property, JCT does not

estimate the forgone revenue associated with solar separate from other eligible technologies.

66 Data from the IRS Statistics of Income files are not directly comparable to JCT’s tax expenditure estimates. Tax

expenditures are estimates of the forgone revenue associated with a tax provision in a given fiscal year. The IRS

Statistics of Income data are estimates based on tax returns filed for a given calendar year.

67 Internal Revenue Service, Individual Income Tax Returns Line Item Estimates, 2019, Publication 4801 (Rev. 122021), 2019, pp. 128-129, https://www.irs.gov/pub/irs-pdf/p4801.pdf.

68 Ibid.

69 All estimates in this paragraph are 10-year estimates, as provided in JCT, Estimated Budget Effects of the Revenue

Provisions of Title I – Committee on Finance, of an Amendment in the Nature of Substitute to H.R. 5376, “An Act to

Provide for Reconciliation Pursuant to Title II of S. Con. Res. 14,” as Passed by the Senate on August 7, 2022, and

Scheduled for Consideration by the House of Representatives on August 12, 2022, JCX-18-22, August 9, 2022.

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What State Policies Support Solar Energy

Development?70

Per the Federal Power Act, states have jurisdiction over most aspects of electricity generation and

distribution.71 Consequently, many policies that affect the development of solar energy are

implemented by states. This section discusses one common state policy, a renewable portfolio

standard. Other state policies designed to accelerate the deployment of solar energy include net

metering (mentioned in the section “How Does Solar Energy Impact Electricity Costs for

Consumers?”), state tax credits, and allowing third-party ownership (i.e., solar leasing).72

Renewable portfolio standards (or, more broadly, electricity portfolio standards), as typically

implemented, set requirements on utilities to procure a minimum share of their electricity sales

from specified renewable sources such as solar.73 Many factors influence solar energy

development, but renewable portfolio standards are widely credited as being a key factor in the

United States historically, as they have provided a policy-driven source of demand for renewable

electricity generation. Thirty states, three U.S. territories, and the District of Columbia are

implementing mandatory electricity portfolio standards, and an additional eight states and one

territory have voluntary standards.74 Jurisdictions differ in their definitions of eligible clean

energy sources, but solar is eligible in all cases. Nineteen of these policies include specific

requirements or extra incentives for solar.75

How Are Tariffs and Trade Restrictions Affecting

Solar Imports and Domestic Solar Manufacturing?76

While several different semiconducting materials may be used in panels, crystalline silicon (CS)

was used in over 95% of solar panels produced globally in 2020. The remainder of panels were

thin-film panels, which are typically less effective at converting incoming sunlight into electricity.

The CS PV supply chain consists of four primary manufacturing stages: (1) production of bulk

polysilicon, (2) manufacture of thin sheets of CS known as wafers, (3) manufacture of solar cells,

and (4) assembly of solar panels. In 2020, China accounted for over 70% of global production of

each stage (Figure 5). The United States currently has manufacturing operations in the final

stage, CS panel assembly, where imported cells are wired together and framed. While the U.S.

assembly represents 3% of global CS PV panel assembly in 2020, U.S. CS PV panel production

70 Ashley Lawson, Analyst in Energy Policy, was the author of this section.

71 16 U.S.C. §824. For discussion of the Federal Power Act, see CRS In Focus IF11411, The Legal Framework of the

Federal Power Act, by Adam Vann.

For more information of state solar energy policies, including details by state, see North Carolina Clean Energy

Technology Center, Database of State Incentives for Renewables & Efficiency (DSIRE), https://www.dsireusa.org/.

73 Renewable portfolio standard policy design is discussed further in CRS Report R45913, Electricity Portfolio

Standards: Background, Design Elements, and Policy Considerations, by Ashley J. Lawson.

74 DSIRE, Renewable & Clean Energy Standards, September 2020, https://ncsolarcen-prod.s3.amazonaws.com/wpcontent/uploads/2020/09/RPS-CES-Sept2020.pdf.

75 Galen Barbose, U.S. Renewable Portfolio Standards: 2021 Status Update: Early Release, Lawrence Berkeley

National Laboratory, February 2021, p. 10.

76 Manpreet Singh, Analyst in Industrial Organization and Business, was the author of this section.

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accounted for about 10% of apparent U.S. consumption of CS PV panels, highlighting the

inability of current domestic production to satisfy U.S. demand.77

Figure 5. Upstream CS PV Value Chain

Share of Global Production by Geographic Area, 2020

Source: Figure created by CRS from G. Masson and I. Kaizuka, Trends in Photovoltaic Applications 2021,

International Energy Agency, pp. 44-46.

The United States has applied tariffs on imports of certain solar energy equipment since 2012.78



The Obama Administration imposed double- and triple-digit antidumping and

countervailing duty tariffs on U.S. imports of CS PV cells and panels from China

in 2012 and 2015 and on imports from Taiwan in 2015. These tariffs were

extended in 2019 (China) and 2020 (China and Taiwan) until the next five-year

review.79

In 2018, the Trump Administration—acting under Section 201 of the Trade Act

of 197480—responded to an industry petition by imposing tariffs of 30% on

imports of CS PV cells exceeding a 2.5 GW annual tariff-free quota and on all

77 International Energy Agency (IEA), Photovoltaic Power Systems Program (PVPS), Trends 2018 in Photovoltaic

Applications, December 3, 2018, p. 56. Apparent consumption accounts for total production plus imports minus

exports. U.S. International Trade Commission (USITC), Crystalline Silicon Photovoltaic Cells, Whether or Not

Partially or Fully Assembled Into Other Products, Investigation no. TA-201-75, December 2021.

78 See CRS Report R47093, U.S. Solar Photovoltaic Manufacturing, by Manpreet Singh.

79 The USITC conducts sunset reviews every five years to determine whether to extend antidumping and countervailing

duties. For more information, see section 751(c) of the Tariff Act of 1930, 19 U.S.C. §1675(c).

80 Section 201 of the Trade Act of 1974 (19 U.S.C. §2251) provides temporary relief for a U.S. industry from import

competition. See CRS In Focus IF10786, Safeguards: Section 201 of the Trade Act of 1974, by Vivian C. Jones.

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

CS PV panels.81 For imports from China and Taiwan, the Section 201 tariffs were

additional to antidumping and countervailing duties. The tariff rates and scope of

coverage have subsequently been adjusted several times.82 On February 4, 2022,

President Biden extended the Section 201 tariffs on CS PV cell and panel imports

for another four years at a 14.75% rate and doubled the amount of CS PV cells

exempt from tariffs to 5 GW annually.83

In 2018, the Trump Administration placed a 25% duty on steel and a 10% duty on

aluminum imported from most countries. These duties affect BOS equipment—

such as PV brackets, panel frames, cabling, power electronics housing, batteries,

and wiring84—and are projected to add 2%-5% to PV system costs.85

Additional tariffs on a long list of Chinese products, including inverters and other

solar equipment, were imposed at a 10% rate in September 2018. The rate was

raised to 25% in May 2019.86

CS PV panel imports from China declined after antidumping and countervailing duties were

imposed in 2012. Since 2018—the start of the Section 201 tariffs—the volume of CS PV panel

imports increased from about 5 GW in 2018 to 19 GW in 2020, led by imports from Malaysia,

Vietnam, and Thailand. In April 2022, in response to an industry petition, the Department of

Commerce initiated an inquiry into whether Chinese manufacturers are circumventing duties by

sending nearly finished products from China to Malaysia, Vietnam, and Thailand for minor

processing before shipping them to the United States.87

In June 2022, President Biden used emergency authorities to suspend duties on imports of solar

cells and panels from Cambodia, Malaysia, Thailand, and Vietnam for 24 months to support U.S.

solar deployment efforts.88 In December 2022, the Commerce Department released an affirmative

preliminary decision finding that four companies were circumventing duties through these four

countries. The Commerce Department issued a country-wide circumvention finding for each of

81 The solar tariff excludes countries that are part of the Generalized System of Preferences list so long as these

countries account for less than 3% individually, or 9% collectively, of U.S. imports of solar cells in any given year. A

few countries have been removed from the list. For example, Turkey and India were taken off in spring 2019.

82 The U.S. Trade Representative announced certain exemptions in June 2019 for particular types of panels including

bifacial panels that generate electricity on both sides.

83 The tariff rate is to decrease 0.25 percentage points annually through 2026. Executive Office of the President

(Biden), “To Continue Facilitating Positive Adjustment to Competition from Imports of Certain Crystalline Silicon

Photovoltaic Cells (Whether or Not Partially or Fully Assembled into Other Products),” 87 Federal Register 7357,

February 4, 2022.

84 Section 232 of the Trade Expansion Act of 1962 (19 U.S.C. §1862, as amended) permits the President to levy tariffs

and quotas on imports found to threaten or impair U.S. national security. Excluded from the Section 232 tariffs are

several countries, including Canada, Mexico, and the European Union.

85 David Feldman, Jack Hoskins, and Robert Margolis, Q4 2017/Q1 2018 Solar Industry Update, NREL, May 2018, p.

86 Section 301 of the Trade Act of 1974 (19 U.S.C. §2411-2420) allows the Office of the United States Trade

Representative (USTR), at the direction of the President, to impose import restrictions if USTR determines that a

foreign country’s acts, policies, or practices are unreasonable and discriminatory. See CRS Report R45529, Trump

Administration Tariff Actions: Frequently Asked Questions, coordinated by Brock R. Williams.

87 CRS Insight IN11946, Circumvention Inquiry into Solar Imports, coordinated by Liana Wong.

88 The White House, “Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free

Importation of Solar Cells and Modules from Southeast Asia,” press release, June 6, 2022,

https://www.whitehouse.gov/briefing-room/statements-releases/2022/06/06/declaration-of-emergency-andauthorization-for-temporary-extensions-of-time-and-duty-free-importation-of-solar-cells-and-modules-from-southeastasia/.

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the four countries, and companies operating there will be required to present evidence that they

are not circumventing to avoid the application of duties when exporting solar cells and panels to

the United States. A final determination is expected to be released by May 2023. As a result of the

presidential proclamation issued in June 2022, no duties are to be collected on solar imports from

these four countries until June 2024 so long as the imported products are consumed in the United

States within six months of entry.89

The tariff effects have not been felt evenly across the four main manufacturing stages:

1. Polysilicon refinement. The solar industry consumes over 90% of the global

output of polysilicon.90 While the United States and China produced similar

shares of global polysilicon output in 2011,91 production in China expanded to

76% of global output in 2020, while U.S. production declined to 5%.92 Domestic

production declined largely due to antidumping and countervailing duties

imposed by China on solar-grade polysilicon imports from the United States

since 2014 (extended in 2020 for five years).93 As the majority of polysilicon

consumers (i.e., CS PV wafer producers) are located in China, accounting for

96% of global CS PV wafer production in 2020, U.S. producers have faced

challenges in competing in the global polysilicon market. Additionally,

production expansion in China lowered the global market price of polysilicon,

making many polysilicon producers globally less profitable and forcing them to

exit the market or reduce production.

Nearly two-thirds of polysilicon production in China in 2020 came from plants in

the Xinjiang region, where some producers have come under scrutiny for alleged

use of forced labor.94 Under P.L. 117-78, enacted in December 2021, all products

mined or manufactured in China’s Xinjiang Uyghur Autonomous Region are

presumed to be produced using forced labor and therefore banned from U.S.

entry unless proven otherwise.95 The act identifies polysilicon as a high-priority

sector for enforcement and became effective on June 21, 2022.

2. CS wafer production. In 2020, 96% of global wafer production occurred in

China, with the two largest companies, Longi and Zhonghuan, accounting for

nearly two-thirds of total global output.96 Companies that formerly made CS PV

89 U.S. Department of Commerce, “Department of Commerce Issues Preliminary Determination of Circumvention

Inquiries of Solar Cells and Modules Produced in China,” press release, December 2, 2022,

https://www.commerce.gov/news/press-releases/2022/12/department-commerce-issues-preliminary-determinationcircumvention.

90 G. Masson and I. Kaizuka, Trends in Photovoltaic Applications 2021, IEA, p. 42.

91 Ranmali De Silva, “PV production 2013: an all-Asian affair,” Bloomberg New Energy Finance, April 16, 2014, p. 3.

92 Masson and Kaizuka, Trends in Photovoltaic Applications 2021, p. 44.

93 See Global Trade Alert, “China: Extension of Definitive Antidumping Duties on Solar-Grade Polysilicon from the

United States and the Republic of Korea,” at https://www.globaltradealert.org/intervention/16490/anti-dumping/chinaimposition-of-antidumping-duties-on-solar-grade-polysilicon-from-us-and-the-republic-of-korea. A Chinese Ministry

of Commerce announcement (in Chinese) describing the extended countervailing duties is at

http://www.mofcom.gov.cn/article/b/e/202001/20200102931616.shtml, and an announcement describing the extended

antidumping duties is at http://www.mofcom.gov.cn/article/b/e/202001/20200102931610.shtml.

94 IEA-PVPS, National Survey Report of PV Power Applications in China 2020, 2020, p. 23, at https://iea-pvps.org/wpcontent/uploads/2021/09/NSR_China_2020.pdf.

95 Effective June 21, 2022, under Section 307 of the Tariff Act of 1930, 19 U.S.C. §1307. For more information, see

CRS In Focus IF10281, China Primer: Uyghurs, by Thomas Lum and Michael A. Weber.

96 Masson and Kaizuka, Trends in Photovoltaic Applications 2021, p. 45.

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ingots and wafers in the United States—including SunEdison, SolarWorld, and

Panasonic—ceased production between 2013 and 2017.97 According to the DOE,

the only capacity for wafer production in the United States as of February 2022

was a 20 MW plant in Massachusetts owned by Cubic PV.98

3. CS PV cell fabrication. In 2020, 83% of global cell production occurred in

China led by seven companies, many of which also assembled panels.99 No CS

PV cells have been produced in the United States since 2021.100 Companies that

previously made CS cells in the United States—Panasonic, SunPower, and

Yingli—shut down production between 2019 and 2020. U.S. cell producers

contended that they did not benefit from Section 201 tariffs imposed in 2018 on

CS cell and panel imports because nearly all cells were allowed into the country

duty-free each year under the 2.5 GW quota during the four-year period after the

tariffs began in 2018. President Biden’s February 2022 order extending the tariffs

for another four years doubled the quota of annual imports not subjected to duties

to 5 GW.

In 2021, South Korea was the largest source of cell imports into the United

States, according to data from the U.S. Census Bureau. Two South Korean

manufacturers, LG and Hanwha Q Cells, import cells for use in their panel

assembly factories in Alabama and Georgia, respectively. Malaysia and Vietnam

have also become sources of imports.

4. CS PV panel assembly. According to the U.S. International Trade Commission,

domestic capacity for CS PV panel assembly increased to 3.8 GW during the

Section 201 tariff period largely due to the opening of new panel manufacturing

plants by Hanwha in Georgia, LG Electronics in Alabama, and Jinko Solar

Industries in Florida.101 LG Electronics announced in February 2022 that it would

exit the solar panel business by June 2022, citing supply chain constraints.102

Domestic producers cite multiple factors for the relatively limited CS PV panel

manufacturing growth since 2018, as compared to increased domestic demand

over the same period. These cited factors include the exclusion of bifacial panels

from tariffs at different times within the tariff period, stockpiling of imports, and

circumvention of duties by China.103 PV panel prices globally have declined

steeply over the past decade. While panel prices in the U.S. market have fallen as

97 Brittany L. Smith and Robert Margolis, Expanding the Photovoltaic Supply Chain in the United States:

Opportunities and Challenges, NREL, July 2019, p. 6.

98 DOE, Office of Energy Efficiency & Renewable Energy, Solar Energy Technologies Office, “Solar Manufacturing,”

at https://www.energy.gov/eere/solar/solar-manufacturing.

99 IEA-PVPS, National Survey Report of PV Power Applications in China 2020, pp. 23-24.

100 David Feldman and Robert Margolis, H2 2020: Solar Industry Update, NREL, April 6, 2021, p. 43, at

https://www.nrel.gov/docs/fy21osti/79758.pdf.

101 USITC, Crystalline Silicon Photovoltaic Cells, p. 20.

102 LG, “LG to Exit Global Solar Panel Business,” press release, February 23, 2022, at https://www.lg.com/us/pressrelease/lg-to-exit-global-solar-panel-business.

103 World Trade Organization member developing countries with less than a 3% share of solar cell and panel imports to

the United States are exempt from the Section 201 tariffs. Suniva and Auxin Solar claim that imports from Cambodia,

excluded from tariffs, have rapidly risen since 2019 due to Chinese companies using the country as an export platform.

USITC, Crystalline Silicon Photovoltaic Cells, p. 27.

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well, they remained 61% higher on average than the global average selling price

in 2018 despite the tariffs on imported cells and panels, according to NREL.104

Since 2019, inverters made in China have faced a 25% U.S. tariff. To avoid the tariff, two large

suppliers of inverters to the U.S. market are reportedly planning to shift production from China to

other locations.105 According to the Solar Energy Industries Association, U.S. inverter production

is declining, primarily due to the closure of two major U.S. facilities at the end of 2016.106 Other

components needed for solar panel assembly, such as backsheets and junction boxes, are also

among the products that face a 25% tariff if imported from China.107

Thin-film panels accounted for 16% of solar deployments in the United States in 2020, a higher

market share than global deployment, which was less than 5%.108 Thin-film panels are

comparatively simple to manufacture relative to CS PV panels. A single company can typically

produce thin-film panels, because these panels do not require the four discrete manufacturing

stages for CS PV panels.109 The leading producer of thin-film panels globally is U.S.-based First

Solar, and the primary market for thin-film PV installations is the utility sector.

What U.S. Jobs Are Supported by the Solar

Industry?110

In 2020, solar PV provided the largest share (about 28%) of jobs in the U.S. electric power

generation sector, at 231,574 jobs,111 despite solar’s limited role in total electricity generation.112

104 David Feldman and Robert Margolis, Q4/Q1 2019 Solar Industry Update, NREL, May 2019, p. 60.

105 Every major inverter manufacturer makes its solar inverters outside the United States, primarily in China. According

to Wood Mackenzie, California-based Enphase and Israeli-based SolarEdge supplied 89% of the U.S. market for

inverters last year. SolarEdge makes its products in China and operates an inverter factory in Hungary. It also has plans

for a new manufacturing site in Vietnam. Enphase expects to move some inverter manufacturing from China to

Mexico. Separately, China’s Huawei, which makes solar inverters and accounted for more than one-fifth of the global

market in 2018, has ceased U.S. sales, according to press reports, after about a dozen Members of Congress called for

its inverters to be banned from the U.S. electricity network. Wood Mackenzie says Huawei represented around 4% of

the U.S. market.

106 Solar Energy Industries Association (SEIA)/Wood Mackenzie, U.S. Solar Market Insight, 2017 Year in Review,

March 2018, pp. 57-58.

107 Backsheets are intended to electrically insulate the panel and protect it from moisture, wind, and ultraviolet light

damage, and a PV junction box housing electrical connections is an enclosure usually installed on the backside of a

solar panel. The majority of junction boxes are made in China.

108 David Feldman, Kevin Wu, Robert Margolis, H1 2021: Solar Industry Update, NREL, June 22, 2021, p. 26, at

https://www.nrel.gov/docs/fy21osti/80427.pdf.

109 Gregory M. Wilson et al., “The 2020 Photovoltaic Technologies Roadmap,” Journal of Physics D: Applied Physics,

vol. 53, no. 493001 (2020), p. 11.

110 Manpreet Singh, Analyst in Industrial Organization and Business, was the author of this section.

111 The federal government does not collect data on employment in the solar energy industry as a discrete sector.

Instead, employees are included in a variety of manufacturing, service, and power generation sectors such as those

defined by various NAICS codes. Solar employment figure of 231,474 from SEIA pertains to individuals spending

50% or more of their labor hours on solar goods or services. SEIA et al., National Solar Jobs Census 2020, p. 8. Jobs

for all sources of electric power generation in the United States totaled 833,573 in 2020 from DOE, 2021 United States

Energy Employment Report, DOE/SP-0001, 2021.

112 Estimation includes both small-scale and utility-scale solar PV systems. EIA, Electricity Generation, Capacity, and

Sales in the United States, March 18, 2021, at https://www.eia.gov/energyexplained/electricity/electricity-in-the-usgeneration-capacity-and-sales.php#:~:text=

In%202020%2C%20net%20generation%20of,solar%20photovoltaic%20(PV)%20systems.

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Over two-thirds of the solar-related jobs counted in a solar industry employment survey

conducted in 2020 were in installation and development (Figure 6), which has been a consistent

pattern since 2015. Over half of all installation employment was related to residential-scale

projects—though these small-scale projects provide less than half of solar electricity generation

(Figure 2)—because they tend to be more labor intensive than utility-scale and commercial

projects.113 Because most jobs are in installation and development, circumstances affecting

demand for residential solar deployment can adversely affect total solar industry employment.

These installation and development jobs tend to be located in states that have higher levels of

solar deployment. California, Texas, and Florida had the highest cumulative solar capacity

installed as of 2021 and rank in the top four states, along with New York, for the greatest number

of solar jobs.114

Figure 6. U.S. Solar Employment Breakdown by Sector 2020

Source: Figure created by CRS using data from Solar Energy Industries Association, Solar Foundation, and

Interstate Renewable Energy Council, National Solar Jobs Census 2020, May 2021.

Notes: Solar job figures shown here account for employment positions in which more than 50% of working

hours are spent on solar-related work.

Direct employment in U.S. solar manufacturing, including for both CS PV and thin-film

technologies, was about 31,050 workers in 2020, accounting for about 14% of total employment

related to the solar energy sector. According to the U.S. International Trade Commission,

production of CS PV panels represented about 2,500 jobs in 2020.115 States with the largest

manufacturing facilities, such as Ohio and Georgia, primarily rely on out-of-state solar demand.

Smaller facilities tend to cluster in states or locations with relatively higher solar deployment,

such as in New York and California.116 Figure 7 shows locations of domestic PV component

manufacturing as of 2021.

113 DOE, 2021 United States Energy Employment Report, DOE/SP-0001, 2021, p. 51.

114 SEIA, “Top 10 Solar States,” at https://www.seia.org/research-resources/top-10-solar-states-0; and SEIA et al.,

National Solar Jobs Census 2020, p. 14.

115 USITC, Crystalline Silicon Photovoltaic Cells, p. 21.

116 SEIA et al., National Solar Jobs Census 2020, p. 15.

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Figure 7. Domestic PV Manufacturing

January 2022

Source: National Renewable Energy Laboratory (NREL), January 2022. During 2022, NREL switched to

providing this data in an active format, available at NREL, “What is Solar Manufacturing?,” at

https://www.energy.gov/eere/solar/solar-manufacturing.

Notes: Figure includes active manufacturing sites and shows nameplate annual capacity or potential annual

output. Facilities may not have produced the amounts shown. No manufacturing capacity was located in Alaska

and Hawaii as of January 2022. Polysilicon manufacturing capacity is measured in megatonnes (MT) of polysilicon

production per year.

How Much Land Is Needed for Solar Energy?117

Land is required for the extraction, production, and consumption of energy and for the generation,

transmission, and distribution of electricity.118 There is not a generally accepted standard metric

or methodology for a comparison of land use across energy technologies or across installations of

even a single technology such as solar PV.119 Determining how much land is needed depends on

117 Morgan Smith, Analyst in Energy Policy, was the author of this section.

118 With the development of some energy technologies—including hydroelectric power, offshore wind, aquaculture,

and floating solar—“land” use can also include water. For additional information on water use and mitigations, see the

section “What Is Dual-Use Solar Power?”

119 Llorenç Milà i Canals et al., “Key Elements in a Framework for Land Use Impact Assessment Within LCA,”

International Journal of Life Cycle Assessment, vol. 12, no. 1 (2007), pp. 5-15.

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the purpose that is being evaluated and what assumptions or boundaries are included. For

example, an analysis of electricity demand could calculate how much land is needed to support an

MW of electricity generation capacity. Another study might calculate how much revenue can be

produced per square meter either from electricity sales or from land leasing. One might examine

the magnitude of land quality impacts including habitat changes, soil quality impacts, or water

quality impacts.120 Additionally, one could determine emissions offsets by calculating the

greenhouse gas emissions or particulate emissions per square meter. Power density is a metric

that accounts for land use, is broadly useful for evaluating solar energy, and can compare solar

energy with other technologies. Power density can be expressed as a unit of power per unit of

area (e.g., watts of electricity per square meter, We/m2).

The calculation of power density is not a straightforward process—especially if the goal is to

compare solar energy with other energy technologies—and results can depend on the

methodology used and on the assumptions or boundaries included. For example, when comparing

renewable to nonrenewable energy technologies, renewables generally have lower power

density—meaning they require more land to produce the same amount of electricity as

nonrenewable sources.121 However, renewable sources can use the same land area year after year,

while some nonrenewable sources such as fossil-fuel-based sources consume new land over time.

This complexity suggests the need to consider additional metrics such as a “time to land use

equivalency,” which would account for the additional land use over time.122

Additional factors that can affect the calculations of power density include whether to consider

the area needed for electricity generation only or also the land areas used for electricity

transmission or waste disposal. Calculations could also include inputs such as land used for

upstream and downstream process steps (e.g., extraction of fuels or resources used for electricity

generation)—which could be critical for comparisons between solar energy and other energy

sources.

Others factors might be relevant for the comparison of solar energy between different locations or

over time. These include how much solar energy is incident on the area, how much land is needed

for just the solar panels compared to total site land area, the efficiency of the panels, and other

technology factors such as whether or not the panels track the sun’s movements or if the panels

are bifacial and can absorb sunlight from both sides.123 Calculations can also change with time as

technology innovation leads to increased energy efficiency.

One example of a calculation power density for solar PV comes from a review of 54 studies that

examined the power density of electric power production in the United States.124 It found that

solar energy has a lower power density than natural gas, nuclear, oil, and coal but a higher power

density than wind, hydropower, biomass, and most geothermal. The review accounted for energy

120 The question of how much impact solar energy development has on the land is a particularly challenging one. For

more information on these considerations see “What Are the Potential Impacts of Solar Energy Development on

Land?”

121 John van Zalk and Paul Behrens, “The Spatial Extent of Renewable and Non-Renewable Power Generation: A

Review and Meta-Analysis of Power Densities and Their Application in the U.S.,” Energy Policy, vol. 123 (2018), pp.

83-91.

122 Anne M. Trainor, Robert I. McDonald, and Joseph Fargione, “Energy Sprawl Is the Largest Driver of Land Use

Change in United States,” PLoS One, 11 (9), September 8, 2016.

123 Robert M. Horner and Corrie E. Clark, “Characterizing Variability and Reducing Uncertainty in Estimates of Solar

Land Use Energy Intensity,” Renewable and Sustainable Energy Reviews, vol. 23 (July 2013), pp. 129- 137.

124 Van Zalk and Behrens, “The Spatial Extent of Renewable and Non-Renewable Power Generation.” The review

considered nine energy sources: biomass, coal, geothermal, hydro, natural gas, nuclear, oil, solar, and wind.

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conversion efficiencies, capacity factors, and infrastructure area, including infrastructure

associated with energy production (e.g., mines).125 The review did not control for time, reporting

that the earliest study included in the analysis was from 1974; however, the review concluded

that, of the nine energy types evaluated, only solar had a statistically significant increase in power

density over time.126 Published values for power density for solar systems range from 1.5 to 19.6

We/m2.127 Generally, solar thermal and utility-scale PV were found to require more land area to

produce the same amount of electricity than residential PV and CSP. While the technology for

residential PV and utility-scale PV is similar, sloped rooftops may allow more sunlight to reach

otherwise flat panels for residential systems, and the spacing of panels at utility-scale facilities

(regardless of tilt)—to provide for maintenance and to avoid shading—may lead to lower power

densities.128

What Are the Potential Impacts of Solar Energy

Development on Land?129

The impacts of solar energy development on land and land cover can be measured by comparison

to the previous state of the land before an energy project was developed.130 Short-term impacts

include preventing the use of land for other applications, emissions from decaying biomass

cleared from the land, and emissions from soil disturbance. Long-term impacts can include

pollution of the soil from metals (potentially exacerbated during a solar array’s

decommissioning), altering erosion of soil and increased runoff, impacts on biodiversity

including reduced habitat, soil compaction, and materials remaining after decommissioning.

Some of these long-term impacts could affect land reuse131 or increase time-to-recovery, which

refers to how long it takes after decommissioning (or disturbance) for the used land to revert to its

previous use and/or condition.132 Some of these impacts result in externalities, environmental

costs, and others costs related to land use reversion that are considerations for project developers

125 Conversion efficiency is a measure of how much usable energy results from the technology compared to the input

energy. Capacity factor is the ratio of electricity generated during a period of time to the maximum possible electricity

that could be generated during the same period of time.

126 Van Zalk and Behrens reported p-values and considered a p-value less than 0.05 to be significant. For solar energy,

the p-value was found to be 0.001. According to the review, solar energy power density increased by an average of 0.42

We/m2 per year. Wind had an average increase of 0.17 We/m2 per year but a p-value of 0.17, indicating it was not

statistically significant.

127 Van Zalk and Behrens, “The Spatial Extent of Renewable and Non-Renewable Power Generation.”

128 P. Denholm and R. Margolis, The Regional Per-Capita Solar Electric Footprint for the United States, NREL,

Technical Report, NREL/TP-670-42463, December 2007, pp. 5-6, https://www.nrel.gov/docs/fy08osti/42463.pdf.

129 Morgan Smith, Analyst in Energy Policy, was the author of this section.

130 Land use refers to activities that take place on land, such as growing food. Land cover refers to the physical

characteristics of the land surface, such as grassland or concrete. D. G. Brown et al., “Ch. 13: Land Use and Land

Cover Change,” in Climate Change Impacts in the United States: The Third National Climate Assessment, J. M.

Melillo, Terese (T. C.) Richmond, and G. W. Yohe, Eds., U.S. Global Change Research Program, 2014, pp. 318-332,

https://nca2014.globalchange.gov/report/sectors/land-use-and-land-cover-change.

131 Argonne National Laboratory, “Solar Energy Development Environmental Considerations,” https://solareis.anl.gov/

guide/environment/; D. Turney and V. Fthenakis, “Environmental Impacts from the Installation and Operation of

Large-Scale Solar Power Plants,” Renew. Sustain. Energy Rev., vol. 15 (2011), pp. 3261-3270.

132 Some argue that uses where the land can recover quickly should not be counted the same as use that delays full

recovery for decades or centuries. Additional work is needed to determine appropriate land use metrics for comparisons

between the different impact types. DOE, “Chapter 10: Concepts in Integrated Analysis,” Quadrennial Technology

Review (2015), https://www.energy.gov/quadrennial-technology-review-2015, pp. 388, 407.

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and governmental entities when regulating or evaluating the development of solar energy

projects. Conversely, compared to other energy sources used to generate electricity, studies have

concluded that solar power’s impacts on a number of land use impacts are neutral or beneficial

(for example chemical exposure, habitat and climate change impacts, soil erosion during

construction, and surface water runoff quality).133

Project site selection also affects potential land impacts. Preferred locations for solar power

include areas with high solar intensity/solar incidence, flat land with minimal site preparation

needed, land in proximity to electricity demand and to electricity transmission lines, and land

with physical access such as roads for installation and maintenance.134 These site selection

preferences result in some projects preferentially targeting land types including forests,

grasslands, deserts, and farmland.135 Farmers may install PV arrays to supplement income or to

ensure reliable electrical supply for their farming operations via on-site energy sources. Forest

land or desert land might be preferred for development because of lower costs of acquisition or

lack of existing developments.

The use of these types of land for solar projects can be controversial and often faces opposition.136

Opposition to the use of farmland for solar projects argues that it may remove valuable arable

land from food production (thus disrupting global food supplies and local farm economies),

interfere with scenic views, or disrupt the rural character of the region, as discussed in the section

“What Are Potential Impacts of Solar Energy Development on Agriculture?”137 Opposition to the

use of forest, grassland, and desert is primarily based on ecological and environmental

considerations such as impacts on water systems (retention, filtration, and contamination) and

animal habitats, though it can also include impacts on sightlines/view impacts and adjacent

property values.138

There are mitigations that can help address both the land use impacts and the challenges related to

land use opposition. One approach to mitigation is using already-disturbed land for solar

133 One study identified 32 environmental effect categories covering human health impacts, wildlife and habitat

impacts, and land use and geohydrological impacts. Of those, solar power had comparatively beneficial impacts in 22

categories, neutral impacts in 4 categories, and detrimental impacts in 0 categories, and there were insufficient data to

determine the relative impacts in the other 6 categories. Turney and Fthenakis, “Environmental Impacts.”

134 I. Guaita-Pradas et al., “Analyzing Territory for the Sustainable Development of Solar Photovoltaic Power Using

GIS Databases,” Environmental Monitoring and Assessment, vol. 191 (2019), p. 764; Thomas Daniels and Hannah

Wagner, “Regulating Utility-Scale Solar Projects on Agricultural Land,” Kleinman Center for Energy Policy, August

2022; Alison Davis, “Solar Farming Considerations,” University of Kentucky Agricultural Economics, May 28, 2021,

https://agecon.ca.uky.edu/solar-farming-considerations; Ben Lumby, “Utility-Scale Solar Photovoltaic Power Plants: A

Project Developer’s Guide,” International Finance Corporation, June, 2015; Dirk-Jan van de Ven et al., “The Potential

Land Requirements and Related Land Use Change Emissions of Solar Energy,” Scientific Reports, vol. 11 (2021), p.

2907.

135 Turney and Fthenakis, “Environmental Impacts;” Elnaz Adeh et al., “Solar PV Power Potential Is Greatest over

Croplands,” Scientific Reports, vol. 9 (2019), p. 11442.

136 Lawrence Susskind et al., “Sources of Opposition to Renewable Energy Projects in the United States,” Energy

Policy, vol. 165 (2022); Alex Brown, “Locals Worry Wind and Solar Will Gobble Up Forests and Farms,” Stateline, an

initiative of the Pew Charitable Trusts, April 30, 2021, https://www.pewtrusts.org/en/research-and-analysis/blogs/

stateline/2021/04/30/locals-worry-wind-and-solar-will-gobble-up-forests-and-farms; Samantha Gross, “Renewables,

Land Use, and Local Opposition in the United States,” Brookings Institution, January 2020,

https://www.brookings.edu/wp-content/uploads/2020/01/

FP_20200113_renewables_land_use_local_opposition_gross.pdf.

137 Mike Carroll, “Considerations for Transferring Agricultural Land to Solar Panel Energy Production,” North

Carolina State University, Cooperative Extension, 2022, https://craven.ces.ncsu.edu/considerations-for-transferringagricultural-land-to-solar-panel-energy-production/.

138 Susskind et al., “Sources of Opposition.”

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power.139 Land that has already been affected by human development will experience lesser or no

additional impacts compared to a project on undeveloped land. Additionally, land that has already

been developed to some degree may have lower infrastructure costs. These disturbed lands or

land cover types can include airport land, landfills, former industrial sites such as sand and gravel

pits, and former mine lands. The 117th Congress enacted legislation that provides incentives for

developing solar on some of these types of lands.140 A second approach to mitigation is dual-use

solar: incorporating solar power such that it allows for a second, simultaneous use of the land.

Dual use is explained next.

What Is Dual-Use Solar Power?141

Dual uses of land for solar power include widely implemented uses such as rooftop installations

and parking lot covers but also include developing applications such as agrivoltaics and

aquavoltaics.

Agrivoltaics is the co-location of solar and farming or grazing such that they will not impede

either application. As discussed in the section “What Are Potential Impacts of Solar Energy

Development on Agriculture?,” not all uses of agricultural land for solar are dual use.

Agrivoltaics require additional design considerations—such as the spacing, height, and

orientation considerations mentioned above—which can increase costs. Some designs require

deeper foundations or more steel for the elevated panel structures. Additionally, not all crops or

animals are compatible with the panel structures or would benefit from shading, and not all

climate or weather conditions produce increased crop yields.

Aquavoltaics is the co-location of solar power and water.142 This can include solar panels

mounted over bodies of water including canals, water treatment ponds, hydroelectric reservoirs,

and irrigation reservoirs; over aquaculture farms including in rivers, lakes, or tanks; or

“floatovoltaics” or “floating solar”—floating solar panels on pontoons on the surface of the water

or just under the water’s surface (see Figure 8). The solar panel shade reduces evaporation from

the water, reducing loss from the reservoirs or canals or decreasing makeup water costs for the

aquaculture applications.143 The shade can also reduce biofouling or the growth of unwanted

species—such as algae in aquaculture or aquatic weeds in canals or reservoirs. The panels may

have improved energy conversion efficiency from reduced temperatures, with submerged

floatovoltaics seeing the largest increases.144 The power generated can also supply the energy

needs of the aquaculture farms such as for aerating the water or pumping. Solar panels over

139 Jordan Macknick et al., “Solar Development on Contaminated and Disturbed Lands,” NREL, December 2013,

https://www.nrel.gov/docs/fy14osti/58485.pdf.

140 Federal policy encourages solar energy development in certain disturbed lands—for example, by providing a bonus

tax credit to projects located on brownfield sites and other “energy communities.” See section “Solar Deployment” in

this report.

141 Morgan Smith, Analyst in Energy Policy, was the author of this section.

142 Adam Pringle, R. M. Handler, and J. M. Pearce, “Aquavoltaics: Synergies for Dual Use of Water Area for Solar

Photovoltaic Electricity Generation and Aquaculture,” Renewable and Sustainable Energy Reviews, vol. 80, December

2017.

143 Some aquaculture sites, such as shrimp farms, already include greenhouse-like structures to reduce contamination of

the water. They can be adapted with solar panels. Brandi McKuin, et al., “Energy and Water Co-benefits from

Covering Canals with Solar Panels,” Nature Sustainability, vol. 4, March 18, 2021.

144 Submerged floatovoltaics get additional efficiency benefits from reduced temperatures, more consistent

temperatures, the prevention of dust buildup on their surfaces, and anti-reflectivity. Water on the surface of the panel

has a reduced index of refraction difference between the panel and water compared to the typical configuration of a

panel and the air, which reduces how much light reflects off the surface. Pringle, Handler, and Pearce, “Aquavoltaics.”

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canals, particularly those used for irrigation, can provide electricity for pumping or other

irrigation needs within the canals or in adjacent farmland.

Figure 8. Diagram of a Floating Solar Photovoltaic System

Source: Sika Gadzanku et al., “Benefits and Critical Knowledge Gaps in Determining the Role of Floating

Photovoltaics in the Energy-Water-Food Nexus,” Sustainability (2021).

Notes: Figure available via Creative Commons Attribution 4.0 International.

As with agrivoltaics, researchers are still determining the costs and benefits of aquavoltaic

applications. The added costs and challenges are related to additional panel infrastructure and

maintenance, and the impacts on the primary water uses might render some aquavoltaic

applications as non-viable either economically or ecologically.

What Are Potential Impacts of Solar Energy

Development on Agriculture?145

As solar energy deployment has increased (see Figure 2), agricultural land has become

increasingly desirable for siting utility-scale solar PV systems (i.e., solar farms) for electrical

generation. One concern that some raise about solar farm development is that siting solar arrays

on agricultural lands can displace agricultural production.146Additionally, leasing land for utility-

145 Lisa Benson, Analyst in Agricultural Policy, was the author of this section.

146 It takes about 32 acres of solar PV panels to meet the demands of 1,000 homes. See Land-Use Requirements for

Solar Power Plants in the U.S., NREL/TP-6A20-56290, June, 2013. Under a DOE scenario, U.S. solar PV deployment

is predicted to grow to an estimated 1,618 GW by 2050, requiring an estimated 6.6 million acres of land, approximately

equivalent to the size of Massachusetts. See Megan Day, Land Use Planning for Large-Scale Solar, NREL/PR-7A4072470. September 27, 2018.

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Solar Energy: Frequently Asked Questions

scale solar often provides greater revenue than leasing for food production,147 so it can drive up

land rents and land prices. Finally, in some cases it may be prohibitively expensive to restore the

land to agricultural production after the termination of the project.148

While some individual farm operations develop PV arrays through their own investments in solar

technologies as an income supplement or as an on-site energy source for their farming operations,

private solar development companies have increasingly turned to long-term leasing arrangements

with farmers to site PV arrays. Farmers benefit from the lease and solar developers get access to

land on which to site these installations. Prime agricultural lands often represent very large tracts

of land in potentially suitable locations. As important as large tracts of acreage may be, other

variables determine whether a particular site is appropriate for a PV array. The terrain, local

weather factors, proximity to grid connections, local transmission capacity, proximity to main

roads, conservation and environmental impact issues, local/regional land use regulations, and

flood risks all contribute to the suitability of a specific tract of agricultural land for a solar

development company.

In potential lease arrangements, farmers are often interested in whether or not the PV array will

curtail, if not completely end, their ability to continue farming. Typically, contractors constructing

solar farms will strip the topsoil and then mount the PV panels on concrete footings. Not only

does this remove the land from agricultural production during the period of the lease; it can

become prohibitively expensive to restore the land to production after a lease terminates. The

concern that the agricultural land can be permanently lost to production even after a lease ends is

a factor when considering whether to maximize energy capacity on land at the expense of

agricultural production. Suitable land where solar generation can be maximized will tend to be

highly compensated relative to the potential return generated by the agricultural operation, which

may pose a threat to retaining even highly productive agricultural land. Alternatively, while

marginally productive agricultural acreage may be tilled, its yield potential is often quite low, and

the environmental costs can be high (e.g., erodible soils). This type of acreage may be suitable for

maximization of solar generation without posing a significant threat to overall agricultural

production.

Under an alternative type of lease arrangement, solar energy development might occur without

the loss of agricultural production. Under this arrangement, agricultural production may be

possible under and around the solar systems. (See discussion in the section “What Is Dual-Use

Solar Power?”149) The University of Massachusetts Amherst is researching agrivoltaic systems

where PV arrays are raised high enough off the ground and spaced in a way that crops can grow

and some livestock can graze around and beneath them while still allowing for economically

viable solar development.150 In addition, researchers have found that co-locating solar PV arrays

with some crops can be beneficial to them, particularly crops that are shade tolerant such as

147 Xander Peters, “Solar Energy Is a New Cash Crop for Farmers—When the Price Is Right,” Christian Science

Monitor, October 4, 2021, https://www.csmonitor.com/Environment/2021/1004/Solar-energy-is-a-new-cash-crop-forfarmers-when-the-price-is-right.

148 A typical lease from a solar development company may have a term of 30-35 years. Mike Carroll, “Can Solar

Energy Production Be Converted to Farmland?,” North Carolina State University, Cooperative Extension, September 9,

2022, https://craven.ces.ncsu.edu/2021/10/can-solar-energy-production-be-converted-to-farmland; Daniels and

Wagner, “Regulating Utility-Scale Solar Projects on Agricultural Land.”

149 Cheryl Herrick, “Grazing and Solar Energy in Vermont’s Working Landscape,” press release, University of

Vermont’s Center for Sustainable Agriculture, October 19, 2020.

150 Dwayne Breger, “UMass Amherst Study Will Assess Impact of Dual-Use Solar-Agriculture Installations in

Massachusetts,” press release, University of Massachusetts Amherst, December 2, 2020.

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Solar Energy: Frequently Asked Questions

lettuce.151 For instance, the arrays can provide shade for the plants, which can maximize the

benefits that plants receive from their water use while also reducing heat stress. In turn, the crops

underneath the PV arrays engage in transpirational cooling, which reduces the temperature

underneath the arrays and can lead to greater efficiency of the arrays.152

Fear of a decline in agricultural production may be an important factor for some critics of solar

development, particularly where the value of the land for solar exceeds its current value for

agriculture. Research examining the impact on agricultural yields of solar development could

prove important to informing future investment in solar generation.153 State and federal grants to

support development of dual-use agrivoltaic systems, such as the Solar Massachusetts Renewable

Target, could help offset any reductions in agricultural production due to solar panel

installations.154 The AgriSolar Clearinghouse compiles resources on these topics for researchers

and project developers.155

Because U.S. agricultural land often enjoys favorable property tax treatment, different

states/regions may establish regulations governing the use of agricultural lands for

nonagricultural purposes. Local and regional planning commissions can constrain solar

development and may require various permits and clearances that could challenge the longer-term

economic feasibility of solar development, regardless of the suitability of the land for solar

deployment. For example, Ohio specifically allows local regulators to bar utility-scale solar

development or to designate prohibited areas, while Florida expressly permits solar development

in county agricultural zoning districts. Most states leave zoning and permitting up to local

commissions or governments, which may ban it, allow it, or allow it with exceptions or

exemptions.156 Successfully co-locating agricultural production with solar development could

reduce some of the land use planning constraints—or outright prohibitions—that may apply to

productive agricultural lands that are targeted for solar development.

151 Greg A. Barron-Gafford et al., “Agrivoltaics Provide Mutual Benefits Across the Food-Energy-Water Nexus in

Drylands,” Nature Sustainability, vol. 2 (September 2, 2019), pp. 848-855.

152 Transpiration occurs in plants when they experience warm conditions and dissipate heat through their leaves. To

learn more, see Hua Lin et al., “Stronger Cooling Effects of Transpiration and Leaf Physical Traits of Plants from a Hot

Dry Habitat Than from a Hot Wet Habitat,” Functional Ecology, vol. 31 (May 26, 2017).

153 Some research has shown that varieties of lettuce, tomatoes, pasture grass, and biogas maize produce greater yields

in the shade than under full sunlight. See Adeh et al., “Solar PV Power Potential Is Greatest over Croplands.”

154 This program aims to create a long-term solar incentive program in the commonwealth. See Commonwealth of

Massachusetts, “Solar Massachusetts Renewable Target (SMART),” https://www.mass.gov/solar-massachusettsrenewable-target-smart.

155 National Center for Appropriate Technology, “AgriSolar Clearinghouse,” 2022,

https://www.agrisolarclearinghouse.org/.

156 Daniels and Wagner, “Regulating Utility-Scale Solar Projects on Agricultural Land.”

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Solar Energy: Frequently Asked Questions

Author Information

Ashley J. Lawson, Coordinator

Analyst in Energy Policy

Morgan Smith

Analyst in Energy Policy

Molly F. Sherlock

Specialist in Public Finance

Lisa S. Benson

Analyst in Agricultural Policy

Manpreet Singh

Analyst in Industrial Organization and Business

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