Despite a 14% dip in 2025, the US solar market remains dominant, projecting 769 GW by 2036. Policy changes and incentives shifts impacted short-term growth.
Understanding the US solar market landscape in 2025
In 2025, the US solar market added 43.2 gigawatts of new photovoltaic capacity, marking a 14% decline compared to the previous year. Despite the slowdown, solar PV remains the country’s primary source of new electricity generation. Throughout the year, solar accounted for 54% of all new electricity generation capacity added to the US grid.
This is according to the US Solar Market Insight 2025 Year in Review report, published by the Solar Energy Industries Association (SEIA) in conjunction with analysis firm Wood Mackenzie, which examines the state of the sector and development prospects up to 2036.
The document highlights how the slowdown recorded in 2025 is mainly linked to regulatory uncertainty and changes to tax incentives. Nevertheless, solar continues to dominate the expansion of the US electricity system, and according to analysts’ forecasts, cumulative photovoltaic capacity in the United States will increase from approximately 279 GW at the end of 2025 to about 769 GW by 2036.
The average projected growth rate is over 44 GW of new installations annually over the next decade, confirming the technology’s central role in the American energy transition.
On the topic, also read: Trump voters like solar energy, especially if it’s made in USA
Why the US solar market slowed down in 2025
The year 2025 was characterized by political and commercial changes that altered the sector’s trajectory.
One of the main elements is the approval of the law One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, which accelerated the phase-out of several renewable energy tax credits. The regulation establishes new deadlines:
- projects must begin construction by July 4, 2026, or
- become operational by December 31, 2027 to qualify for full tax incentives.
These changes forced developers and investors to rapidly revise project portfolios. Many operators chose to postpone the commissioning of plants and focus on “safe harbor” strategies, i.e., the formal initiation of projects to maintain access to tax credits.
Several factors added to this uncertainty: trade investigations into modules, possible new import tariffs, and permitting delays. The result was a widespread slowdown in installations throughout the year.
Solar’s share in the US electricity system
Despite the annual decline in installations, solar PV continues to dominate the expansion of electricity generation in the United States.
According to the report’s data, solar accounted for 54% of new electricity capacity installed in 2025, while solar and storage systems combined made up 79% of new energy capacity installations in the country.
The importance of solar PV also emerges in the long term. In the electricity system projections developed by Wood Mackenzie, approximately half of the new electricity capacity added annually until 2060 will be solar-powered.
Today, in the United States, solar contributes to nearly 9% of national electricity production, a share almost seven times higher than ten years ago.
Installed solar energy is now sufficient to power approximately 47 million homes, while over 5.9 million photovoltaic systems are operational in the country.
Installations across different market segments
The report analyzes in detail the performance of the main segments of the US solar market.
Residential
In 2025, the residential segment installed 4,647 MW, recording a 2% decline compared to 2024. The expiration of the Section 25D tax credit generated a rush for installations in the second half of the year, but limited component availability and insufficient time to complete sales and installations reduced the impact of this demand peak.
Commercial
The commercial segment showed a more positive dynamic, with 2,345 MW installed, representing a 6% year-over-year growth. A significant portion of installations was driven by projects still tied to the NEM 2.0 net metering regime in California, which continued to generate a significant project pipeline.
Community solar
The community solar sector, however, experienced a significant contraction. In 2025, 1,435 MW were installed, with a 25% decrease compared to 2024. The slowdown is mainly due to the decline in new projects in the states of New York and Maine, which represent the segment’s primary markets.
Utility-scale
The dominant segment remains large-scale installations. In 2025, 34.7 GW were installed, a 16% reduction compared to the previous year. The decline was concentrated primarily in the fourth quarter, when installations dropped by approximately 40% compared to the same period in 2024.
How photovoltaic system prices are changing
In the residential segment, the national average price in Q4 2025 was $3.39 per watt, a 1% decrease year-over-year. This reduction was driven by a 10% drop in solar module prices and lower customer acquisition costs.
In the commercial segment, however, costs increased: the average price rose to $1.72 per watt, a 10% increase compared to 2024. This increase is mainly linked to rising raw material prices such as steel, copper, and aluminum, influenced by new import tariffs.
Utility-scale systems also saw price increases. Average costs reached $1.18 per watt for fixed-tilt systems and $1.35 per watt for single-axis tracker systems, with increases of 11% and 14% respectively compared to the previous year.
Outlook for the US solar market until 2036
Despite the challenges of 2025, the prospects for the US solar market remain extremely positive.
In their baseline scenario, analysts estimate that the country will install approximately 490 GW of new solar capacity over the next decade, bringing total power to 769 GW by 2036.
Several factors support this growth:
- the increase in electricity demand related to data centers and large industrial loads
- the improved economic competitiveness of solar PV
- the expansion of grid and storage infrastructure
According to Wood Mackenzie, even in the absence of current tax incentives, solar will remain competitive compared to other generation technologies. The high costs of new gas power plants and growing electricity demand will continue to favor investments in solar PV.
