The year ahead will see major changes for the U.S. solar industry.

The past year has been a turning point for the U.S. solar industry. The start of the year was marked by ongoing pandemic-related delays, trade enforcement, supply chain issues and higher prices for components and shipping. Many headwinds led to delays and cancellations, and project deployments fell short of initial forecasts.

There was renewed optimism in the second half of the year as the landmark 2022 U.S. Inflation Reduction Act passed, allocating a record $369 billion in spending for climate and energy measures. Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association, dubbed the next 10 years the "solar plus decade," as solar and storage buildouts are expected to continue their momentum, now driven by spending plans. What can we expect in 2023?

As is the case with new technology policy and adoption, the country will use California as a case study for where the solar industry is headed. Specifically, net energy metering (NEM), which contributes to the value of solar energy on residential rooftops, will be a policy of renewed focus this year. Just before the clock switched to 2023, the California Public Utilities Commission (CPUC) unanimously approved NEM 3.0, changing the mechanics of how residential rooftop solar customers get paid for sending excess generation to the grid.

Under the new NEM 3.0, Californians who install projects after April 15 will receive an average of 75% less export solar than under the previous system. This disruptive impact on customer value has led ROTH Capital Partners to project a 30% year-over-year decline in residential solar installations in the state by 2022.

The state will be watching California's residential solar industry closely to see how it will adapt to the loss of system value. Installations are expected to surge by April as Californians rush to secure NEM 2.0 credits for the next 20 years. After that, the industry's installation requests could drop sharply, as happened in Nevada in 2017, when it made similar cuts to net metering.