The U.S. solar industry is facing a period of deceleration, according to the latest Solar Market Insight Report Q3 2025, published by the Solar Energy Industries Association in conjunction with Wood Mackenzie. After several quarters of robust growth, installations, forecasts, and utility-scale deployment have softened amid shifting federal policies, regulatory ambiguity, and diminished demand.
Key Data: Installation Declines and Market Share
In Q2 2025, the industry installed about 7.5 gigawatts-direct current (GWdc) of new solar capacity, a 24 percent drop compared to Q2 2024.
Across the first half of 2025, the U.S. added nearly 18 GWdc of solar capacity.
Solar alone accounted for 56 percent of all new generation capacity in the first half of 2025. When combined with energy storage, the share rose to 82 percent of new power added to the grid. Despite the decline in quarter-to-quarter comparatives, solar and solar plus storage remain the dominant force among new generation technologies in the U.S.
Segment Variations: Residential, Commercial, Utility
- Residential: Installations fell, with Q2 2025 figures down about 9 percent year-over-year.
- Commercial and non-residential: This segment showed modest growth, with commercial capacity rising around 27 percent, largely driven by strong pipelines in states like California under net energy metering policies.
- Utility-scale: The most pronounced decline came here, down about 28 percent compared with Q2 2024.
These disparities reflect differing sensitivities to regulatory policy, permitting timelines, and financing structures.
Manufacturing and Supply Chain Insights
Module manufacturing in the U.S. continues to expand. In the first half of 2025, the country added about 13 GW of new module production capacity, bringing total domestic module capacity to roughly 55 GW.
However, upstream manufacturing of cells, wafers, and polysilicon remains less dynamic. The report notes no significant new upstream investments during the second quarter. While downstream module and panel production capacity is growing, the supply chain’s higher-value input stages are lagging.
Policy and Regulatory Headwinds
A major source of uncertainty is the One Big Beautiful Bill Act and other recent federal policy actions. Forecasts for solar deployment from 2025 to 2030 have been revised downward by 4 to 18 percent due to policy changes or regulatory risk.
Concerns are growing about permitting reform and tightening rules from agencies such as the U.S. Department of Interior. These could affect project lead times and viability, particularly in states like Arizona, California, Utah, and Nevada.
Geographic Patterns and Political Context
Notably, 77 percent of new solar capacity installed during 2025 (as of mid-year) has occurred in states that voted for President Donald Trump in the 2024 election. These include Texas, Indiana, Arizona, Florida, Ohio, Missouri, Kentucky, and Arkansas, eight of the top ten states by capacity.
Texas remains the largest single state for solar additions, followed by California, Indiana, and Arizona.
This geographic pattern reflects both state-level policy choices and favorable solar resources, but also highlights uneven deployment nationally.
Forecasts: What’s Ahead Through 2030
Under some scenarios, by 2030 the U.S. could lose 44 to 55 GW of solar installations compared to earlier projections if policy uncertainty persists.
The less optimistic forecasts account for tighter credit, supply chain constraints, regulatory delays, and reduced incentives.
Conversely, projects currently in development, strong renewable demand, and rising fossil generation costs, especially natural gas, could provide momentum.
Implications and Critical Takeaways
- Investment risk is rising. Developers and financiers are increasingly cautious given delays in upstream manufacturing investment and regulatory uncertainty, particularly around permitting and trade policy.
- Policy decisions will matter. Federal and state regulations, such as net metering, import tariffs, and permitting rules, will heavily influence whether the industry meets earlier growth expectations.
- Solar plus storage remains central. The combined share of 82 percent of new capacity shows that while solar faces headwinds, its integration with storage continues to strengthen grid reliability and diversify the energy mix.
Accuracy and Notes
The figures presented are drawn directly from SEIA and Wood Mackenzie data and confirmed by multiple secondary sources. Some numbers, particularly future forecasts, depend heavily on policy assumptions, meaning changes in the regulatory environment could significantly alter outcomes. Upstream manufacturing references are limited in detail; no new investment does not necessarily mean zero incremental activity but indicates none were large enough to be reported.
Conclusion
The Solar Market Insight Report Q3 2025 paints a picture of a U.S. solar industry at a crossroads. The sector remains strong in some areas but is slowing overall due to regulatory and policy uncertainty. While solar and solar plus storage continue to dominate new power capacity additions, growth in the years ahead may be tempered unless policy clarity, permitting reform, and supply chain investment are secured. State market strength and ongoing demand suggest resilience but also highlight how fragile momentum can be in a shifting policy landscape.