Decoding Solar Capacity: What do those huge megawatt numbers actually mean for the grid?

The U.S. solar industry installed 43.1 gigawatts-direct current (GWdc) of capacity in 2025, down 14% from 2024. GWdc is the nameplate rating of projects before they connect to the grid through inverters, which convert direct current (DC) to the alternating current (AC) our grid uses.

Two elements lower DC ratings to AC ratings. First, inverter losses account for around 4%.

More importantly, solar panels have specific output duration curves; there’s only a very small period when they produce maximum output, or even 80–90%. It’s uneconomical to buy an inverter that rarely hits full MW ratings, so developers resort to “solar clipping.” A 100 MWdc solar array might use inverters delivering a maximum of 80 MW of AC power to the grid. Typical DC/AC ratios are 1.1 to 1.25. You lose only a bit of energy on an MWh basis, but with significantly lower inverter costs. Therefore, MWdc numbers must be translated to the real-world MWac of the grid.

However, all capacity is not the same: a MW of solar capacity has two factors differentiating it from, say, a MW of gas-fired generation.

First, solar operates at a different capacity factor (a resource operating at 100% output all year would have a 100% capacity factor). An average panel capacity factor is 25%, compared to 60% for a combined-cycle gas plant. Because of this, it’s best to think in terms of energy generated. Location also matters; the capacity factor in Massachusetts is 16.5%, while in Arizona it is 29%.

One way to compare these is by energy output. Solar is now approaching 10% of total energy contributed to the grid. Additionally, solar arrays can be deployed faster than new turbines. With rising data center demand, we need all the electricity we can get.

(Source: https://www.eia.gov/todayinenergy/detail.php?id=67005)

Furthermore, solar is not dispatchable. It only generates power when the sun shines, while a gas plant can be called upon at any time, except during certain extreme weather events. In 2024, the mid-Atlantic grid operator PJM down-rated combined-cycle turbines from 96% to 79% in terms of their ability to meet peak demand during the worst hour of the worst day, and recently lowered that rating further to 74%. By comparison, PJM rates solar at only 7%.

When you hear about solar in terms of MWdc, it helps to reframe those values using the information above. Nonetheless, solar has grown considerably. In 2009, about 1 GW (1,000 MW) of solar was added in the U.S. That cumulative total is now 279 GWdc, and analyst Wood Mackenzie forecasts an increase of 490 GWdc over the next decade.

Transcript

What DC Megawatts Really Mean

Capacity Factor And Solar Geography

Dispatchability And Winter Reliability Lessons

Solar Growth Then And Next

SPEAKER_00 0:03

I've got your energy story for this, the third week of March, 2026. Well, recent reporting shows that the U.S. solar industry installed 43.1 gigawatts, so 43,100 megawatts, of direct current, GWDC, of capacity in 2023. That was down 14% from the prior year, but still pretty impressive. For those who want to understand what the gigawatt DC number means, that's the nameplate rating of the cumulative projects before they connect to the grid through the inverters that convert direct currency to the alternating current that our grid uses. For years I didn't really know the difference, but once I finally figured it out, I thought I might as well pass that nugget on. There are two elements that lower the DC rating to the final AC rating. First, there were the inverter losses themselves, but they're pretty small, only a few percent in the form of heat. National Renewable Energy Labs, now the National Laboratory of the Rockies, has used a default value of 4% losses, though some inverters now do better. More important, though, is the fact that solar panels have a specific output duration curve. Given the available sunlight, there's only a small portion of the time they produce at their maximum level, or even operate above 80 to 90% of their nameplate rating. It would thus be illogical to pay for an inverter that only hits its full rating a couple hours per year. Better to lose a bit of solar output, referred to as solar clipping, and save some capital for the next project. So for a 100 megawatt DC system, you might invest in inverters that deliver 80 megawatts of AC power to the grid. As a consequence, one typically sees a ratio of DC to AC on the order of 1.1 to 1.25, though in larger systems, NREL reports values of up to 1.5. You get almost the same energy generation on a megawatt-hour basis, but without paying for those higher inverter costs. So the first thing you have to do when you read megawatt DC numbers is translate them to the real world of the grid or your house. The same general rule applies. That gets you to comparable capacity numbers that you can now look at relative to other sources on the grid. That brings us to the next step, which is where the apples truly differentiate from the oranges or the cumquats for that matter. All capacity is not the same. That's because a megawatt of solar capacity has two factors that differentiate it from, say, a megawatt of gas fire generation from a combined cycle plant. First, solar operates at a different capacity factor. If you had a 100 megawatt AC capacity-rated panel operating at 100% capacity factor, it would generate 8,760 hours times 100 megawatts for 876,000 megawatt hours. For the DOE, an average solar panel has a capacity factor of about 25%, as it compared to about 60% for a combined cycle gas plant. For that reason, when you talk about contribution to the grid, it's best to think in terms of energy generated. Oh, and by the way, it's best to put your panels where the sun is, where the fuel is. Massachusetts will get you a 16.5% capacity factor, while Arizona gets you 29%. Same panel in both places, but Arizona has a lot more fuel. So perhaps the best way to think about an overall comparison is by the energy output. Solar's not too shabby, now approaching 10% of total electric energy contributed to the grid. That's coal and gas we don't have to burn anymore. Plus, you can put in solar rays way faster than you can add new turbines, and with data centers mushrooming up wheely-nilly across the landscape, we need all the electrons we can get. There's a second issue though. The solar is not dispatchable. It shows up when the sun shines, kind of when it wants to. It's like a good-natured dog, of course, with a sunny disposition, that just sits there and looks at you when you say, Come. The gas plant, meanwhile, shows up eagerly panting, most of the time, but not always, in extremely cold weather, for example, gas lines on the plant may freeze, or gas supplies may be unavailable. We learned that the hard way in Texas during 2021's winterstorm Uri and on the East Coast in late 2022 during winterstorm Elliott. As a consequence, in 2024, the Mid-Atlantic grid operator PJM, for example, re-rated its gas turbines down from 96% to 79% in terms of their ability to meet peak demand on the worst hour of the worst day. And they recently lowered that number to 74%. But it still beats solar handily, where fixed panel arrays drop from 33% to 9% and then to 7%. That dog doesn't always show up when you need it. In fact, it shows up when it wants to, when the sun is up in the sky. Although adding batteries can help a lot to achieve some kind of dispatchability. So when you hear about solar in terms of megawatt DC, it may help to reframe that value using the information we just discussed. That said, think about how far the industry's come and the valuable contribution it has made to our power system. In 2009, about one gigawatt, so 1,000 megawatts of solar was added to our power grid. That cumulative total now stands at 279,000 megawatts DC. Remember my caveat. But even so, it's an astonishing number. An analyst Wood Mackenzie foresees that number increasing by 490 gigawatts DC over the next decade. We'll see how that number eventually pans out, but one way or another, it will be big. Well, thanks for watching, and we'll see you again soon.