US Solar Industry Faces 27% Decline in Capacity Installations Due to Policy Changes

The U.S. solar industry is projected to experience a 27% decline in capacity installations between 2026 and 2030 compared to previous forecasts, according to a report released on September 8, 2025, by the Solar Energy Industries Association (SEIA) and Wood Mackenzie. This anticipated downturn is primarily attributed to the rollback of clean energy subsidies under President Donald Trump's tax policy, marking a significant shift from the prior administration's climate agenda.

The SEIA and Wood Mackenzie report highlights that the reduction in federal support is expected to discourage investment in solar projects, potentially leading to increased energy costs and challenges to grid reliability. Industry leaders have expressed concerns that these policy changes could undermine the progress made in renewable energy adoption over the past decade.

Despite these policy setbacks, the U.S. solar industry demonstrated resilience in the first half of 2025. Solar and storage accounted for 82% of new electricity capacity additions during this period. Domestic solar module production increased by 13 gigawatts, totaling 55 GW, with significant installations in states that supported President Trump, such as Texas, Indiana, and Florida. However, the industry has faced rising costs for utility-scale, residential, and commercial solar systems due to tariffs and higher overhead and permitting expenses.

The anticipated decline in solar installations is closely linked to recent federal policy changes. House Republicans passed a tax bill that significantly rolls back clean energy tax credits established under the Biden administration's 2022 Inflation Reduction Act. The legislation proposes widespread cuts to programs supporting renewable energy, including the elimination or acceleration of the phase-out of tax credits for rooftop solar and electric vehicles.

In addition to tax policy changes, the Trump administration has implemented new tariffs and modified existing ones, including duties on imports from Canada and Mexico, as well as changes to Section 232 duties on steel and aluminum. These trade actions have reshaped the economics of solar projects and supply chains, leading to increased costs and market uncertainty.

The rollback of clean energy subsidies and the introduction of tariffs have several far-reaching consequences. Analyses project that these policy changes could result in the loss of 330,000 current and future American jobs, the closure or non-establishment of 331 factories, and a reduction of $286 billion in local investments. The absence of subsidies may push utilities toward more costly natural gas, potentially raising wholesale and household electricity rates by up to 49% in certain states and 18% nationally by 2035. The slowdown in renewable energy growth, coupled with increased reliance on natural gas, could pose challenges to grid reliability, especially amid rising electricity demand driven by AI data centers, increased manufacturing, and electrification trends.

In response to these challenges, industry stakeholders are considering various strategies. Developers are pre-purchasing inventory to meet eligibility for safe-harboring and Investment Tax Credit (ITC) grandfathering. Companies are adopting more strategic pricing with end-users, including carefully defining contractual terms and conditions to address the distribution of risks. Developers are also shifting and diversifying procurement strategies to optimize tariff risks and address supply chain constraints, including proactively developing relationships with new suppliers.

The projected decline in U.S. solar capacity installations between 2026 and 2030 underscores the significant impact of federal policy decisions on the renewable energy sector. As the industry grapples with these challenges, stakeholders are exploring various strategies to adapt and sustain growth. The broader economic and social implications of these policy shifts warrant careful consideration and ongoing analysis.