Solar Market Insight Report

Introduction

• The US solar industry installed 7.5 gigawatts direct current (GW_dc) of capacity in Q2 2025, a 24% decline from Q2 2024 and a 28% decrease since Q1 2025.
• Solar accounted for 56% of all new electricity-generating capacity added to the US grid in the first half of 2025, with a total of 18 GW installed. Combined, solar and storage accounted for 82% of new capacity in the first half of the year.
• The US added 4.3 GW of solar module manufacturing capacity in Q2, bringing the total to 55.4 GW. However, there were no additions of upstream manufacturing capacity (polysilicon, wafer, or cell manufacturing). Establishing new manufacturing facilities for this more resource-intensive and technologically complex part of the solar value chain continues to move slowly.  
• Texas installed the most solar capacity in the first half of 2025 (3.8 GW_dc), followed by California, Indiana, and Arizona.
• In Q2 2025, the residential segment installed 1,064 MW_dc of solar capacity, declining 9% year-over-year and 3% quarter-over-quarter. High interest rates, economic and policy uncertainty continue to be significant challenges for the segment.
• The commercial solar segment set a second quarter record, growing by 27% compared to Q2 2024, and adding 585 MW_dc of new capacity. Growth in California drove this increase – a healthy pipeline of NEM 2.0 installations continues to come online, making up 90% of commercial projects in the state.
• The community solar segment installed 174 MW_dc in Q2 2025, declining 52% year-over-year and 34% quarter-over-quarter. Programs in major state markets are at or close to capacity, with no notable new markets to take their place.
• The utility-scale segment installed 5.7 GW_dc in Q2 2025, decreasing 28% year-over-year and 33% quarter-over-quarter. Deployment in Texas, the segment’s largest market, slowed from recent quarters, driving the decline.
• Passage of the One Big Beautiful Bill Act (OBBBA) has fundamentally changed the policy landscape for the energy industry. Under the new law, the solar industry will no longer have access to the Section 48E and 45Y tax credits after 2027 or the Section 25D tax credits (for customer-owned residential solar) after 2025.
• The solar industry is navigating several other federal policy actions. On July 15, the Department of the Interior issued a memo stating that Interior Secretary Doug Burgum will need to personally sign off on numerous types of federal permitting approvals for a solar project to move forward. Additionally, the US Treasury issued new guidance on August 15 that made changes to the formal definition of “beginning of construction” for solar projects to earn federal tax credits.
• The industry is still assessing the full impacts of these federal actions. To benchmark the possible outcomes for the solar industry, this edition of SMI includes a base case and a low case outlook. Our low case incorporates more pessimistic downside risks from new Treasury guidance and permitting constraints from the Department of the Interior.   
• From 2025-2030, our base case outlook puts total solar deployments at 246 GW_dc – 4% lower than our pre-OBBBA outlook. The negative impacts of the OBBBA are muted by projects already underway, the rush to bring projects online before tax credit deadlines, and intense demand for power supply as new gas generation has become more expensive and less available. By comparison, our low case outlook predicts 202 GW_dc over this same timeframe – a reduction of 18%.