From pv magazine USA
The 8.6 GW of new solar module manufacturing capacity added in the first quarter of 2025 marks the third-largest quarter for new manufacturing capacity on record, according to the “US Solar Market Insight Q2 2025” report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie.
In addition to growing module capacity, US solar cell production capacity doubled in the first quarter to 2 GW with the opening of the ES Foundry factory in South Carolina.
US solar generation grew by 10.8 GW in the first quarter, driven by rising manufacturing capacity. Solar and storage accounted for 82% of all new grid additions, according to the report.
While solar manufacturing and deployment continue to drive US energy independence and growth, new tariffs and potential changes to federal tax credits create significant business uncertainty and threaten the sector’s long-term outlook, the report’s authors said.
SEIA and Wood Mackenzie’s industry forecast, which includes tariffs imposed in the second quarter but not the potential rollback of federal tax credits, projects a nationwide decline in deployment. The analysts warned this could lead to lost investment in local communities, energy shortfalls and higher power bills for US consumers.
“Rollbacks of the energy tax credits, on top of recently levied tariffs, would unequivocally worsen the damage to the solar industry,” said the report.
A separate analysis by SEIA of the impacts of the potential passage of the US House bill projects a devastating energy shortage for the US economy. That analysis found that if lawmakers in the Senate fail to change course, 330,000 current and future Americans jobs could be lost, 331 factories could close or never come online, and $286 billion in local investments could disappear.
If US Congress cuts energy tax incentives, SEIA’s analysis projects that energy production will fall 173 TWh and the United States will not be able to meet demand or compete with China in the global race to power AI.
The report noted that several factors affect various sectors of the market such as high interest rates “and other market headwinds” that will continue to drive down the residential market.
The US residential solar market has been in decline for some time, initially in response to high interest rates but also due to cuts in net metering, as seen in California. Just recently the market witnessed the bankruptcies of major national installer SunPower, residential solar lender, Mosaic and a subsidiary of Sunnova Energy. The report finds that in the first quarter of 2025, the residential solar market added 1.1 GW (DC), representing a 13% year-on-year decline and 4% quarter-over-quarter decrease. Compared to the first quarter of 2024, 22 states experienced drops in installed capacity.
In contrast to the tumbling residential sector, the commercial solar market reached its record first-quarter of installation capacity in the first quarter of 2025, adding 486 MW (DC), a 4% year-on-year increase.
Community solar requires state policy, but with fewer than half the states having enacted supportive policy, the sector is in jeopardy, according to the SEIA/Wood Mac report. The first-quarter report forecasts that without additional statewide programs, community solar growth will stagnate through 2030. In the first quarter of 2025, community solar installations declined 22% year over year, resulting in 244 MW (DC) of new capacity. Some states fared worse than others. For example, in Maine and Massachusetts, installed capacity fell by 85% and 78% year on year, respectively.
Utility-scale solar has been on an upward trajectory but policy uncertainty is causing some large projects to be scrapped. The report find that the utility-scale sector installed 9 GW (DC) of projects in the first quarter of 2025, representing a 7% year-on-year decline. The top five states with the largest installations are Texas, Florida, Ohio, Indiana, and California, making up over 65% of total installations this quarter.
Looking ahead
While US federal policy and tariff risks create uncertainty, the report identified accelerating load growth, driven by the proliferation of data centers, as a more predictable trend. It cited imminent demand increases and corporate sustainability goals as the primary drivers of solar deployment.
In its base case, the report projected the US solar market will add more than 250 GW (DC) by 2030, while noting that policy and tariff risks remain key caveats. The forecast incorporates the most recent tariff announcements.
“In addition to the 25% tariffs on Canada and Mexico, we assume settlement of tariffs over the next 90 days, including a 30% tariff rate for China in 2025 and 2026, and a 10% rate for all other countries,” said the report.
The outlook does not, however, account for the budget reconciliation bill. Overall, uncertainty from potential changes to tax credit policy and tariffs will lead the US solar industry to contract by 2% annually through 2030 in the report’s base case.
Other factors hindering growth include labor shortages and interconnection delays. However, even with the projected contraction, the report expects an average of 43 GW (DC) to be added to the grid each year through 2030.
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