Solar Market Insight Report

Introduction

• The US solar industry installed 10.8 gigawatts direct current (GWdc) of capacity in Q1 2025, a 7% decline from Q1 2024 and a 43% decrease compared with Q4 2024 but still the fourth largest quarter on record.
• Solar accounted for 69% of all new electricity-generating capacity added to the US grid in Q1 2025.
• The US added 8.6 GW of solar module manufacturing capacity in Q1, bringing the total to 51 GW. However, growth in upstream manufacturing capacity remains slow or non-existent. ES Foundry became just the second domestic cell manufacturer when it opened a 1 GW cell factory in South Carolina in January. No new polysilicon or wafer manufacturing came online in Q1.
• Texas installed the most solar capacity in the first quarter of 2025 (2.7 GWdc), 92% more than the second-ranked state, Florida. Utility-scale projects dominated installations in both states.
• In Q1 2025, the residential segment installed 1,106 MWdc of solar capacity, declining 13% year-over-year and 4% quarter-over-quarter. High interest rates and economic uncertainty continued to suppress demand. California maintained its lead in residential solar state rankings with 255 MWdc, but it was the state’s lowest quarterly capacity since Q3 2020.
• The commercial solar segment grew by 4% compared to Q1 2024, adding 486 MWdc of installed capacity. This increase, driven by California NEM 2.0 installations coming online, made it the only solar segment to grow last quarter. However, the segment experienced a 28% decrease compared with Q4 2024, consistent with seasonal trends.
• The community solar segment installed 244 MWdc in Q1 2025, declining 22% year-over-year and 71% quarter-over-quarter. Installations in Maine and New York fueled strong community solar growth at the end of 2024 driven by a net metering change and the alleviation of interconnection backlogs, respectively. Capacity dropped considerably in Q1 in both states, resulting in a decline in national volumes.
• The utility-scale segment installed 9 GWdc in Q1 2025, decreasing 7% year-over-year and 43% quarter-over-quarter. High corporate demand drives the short-term momentum, but policy uncertainty will constrain long-term deployment.
• Complex and evolving trade actions will substantially impact solar development over the next five years. Recent changes to anti-dumping and countervailing duties (AD/CVD) on cells and modules from Southeast Asia, as well as the introduction of new, non-industry-specific tariffs over the past few months, may lead to supply chain shifts and potential project delays or cancellations, particularly in the utility-scale segment.
• The US solar industry also faces significant challenges due to recent federal actions, including proposed changes to tax credits that would effectively make them unusable for new projects in the near term and a shift in energy priorities towards fossil fuels, creating an uncertain environment for solar growth in the coming years.
• Our latest five-year outlook projects that the US solar industry will add an average of nearly 43 GWdc annually through 2030. This Base case forecast reflects the expected impacts of the latest tariffs but excludes potential tax credit changes or other provisions proposed in the most recent budget reconciliation bill.