Solar Market Insight Report

Introduction

• The US solar industry installed 7.8 gigawatts direct current (GWdc) of capacity in Q1 2026, a 27% decline from Q1 2025 and a 42% decline compared with Q4 2025.
  • The residential segment installed 1,179 MWdc of solar capacity, increasing 6% year-over-year and declining 15% quarter-over-quarter.
  • The commercial segment installed 523 MWdc, declining 4% year-over-year and 25% quarter-over-quarter.
  • The community solar segment installed 247 MWdc, declining 4% year-over-year and 67% quarter-over-quarter.
  • The utility-scale segment installed 5.9 GWdc, declining 34% year-over-year and 45% quarter-over-quarter.
• These first quarter installations reflect typical seasonality for the solar industry. In the residential sector, volumes were buoyed by an overflow of installations initiated at the end of 2025 to capture the expiring Section 25D tax credit.
• Both solar and battery storage accounted for an incredible 91% of all new electricity-generating capacity added in the first quarter, reflecting the ability of these industries to consistently build new capacity – a vital advantage for the capacity-constrained US grid. Solar by itself accounted for 60% of all new capacity.
• No additional solar module manufacturing capacity was added in Q1 2026. Module manufacturing has grown tremendously in the last few years, and several new cell and wafer facilities are in development. However, the solar manufacturing industry remains gripped by uncertainty around foreign entity of concern (FEOC) requirements as well as ongoing trade cases that have stymied new development.
• Our outlook for the solar industry from 2026 to 2031 has changed minimally: an increase of 1.4%, mostly from the utility sector. Demand growth remains strong, which has translated into higher solar procurements in utility resource plans, particularly after 2030, but there is variability in capacity and timing of these procurements. Our new outlook reflects a doubling of the US solar fleet in the next five years. While this is a significant amount of cumulative capacity, it reflects a stagnation in annual additions. It only took three years for the last doubling of the US solar industry.