The US solar industry has posted record gains in Q1 2025, adding 10.8 GW DC of solar energy generation capacity and 8.6 GW of module manufacturing capacity, according to the Solar Energy Industries Association (SEIA) and Wood Mackenzie. However, analysts feel that the looming threats to the federal incentives could stall its progress.
The quarterly solar module manufacturing capacity additions expanded the country’s total module production to exceed 56 GW. Yet, upstream integration remains slow as no new polysilicon or wafer capacity was commissioned. During the reporting quarter. only ES Foundry commissioned its solar cell factory in South Carolina (see Bifacial PERC Silicon Solar Cell Manufacturing Factory In US).
In terms of solar generation capacity additions, it was the country’s 4th largest quarter on record as solar accounted for 69% of all new electricity generating capacity added to the US grid during the quarter, according to the US Solar Market Insight Q2 2025 report. Solar and storage accounted for 83% of all new generating capacity added to the grid.
However, the quarterly additions represented a 7% year-on-year (YoY) decline and a 43% quarter-on-quarter (QoQ) decline. The utility-scale segment installed 9 GW DC of capacity, declining by a similar 7% YoY and 43% QoQ. According to the report writers, demand in this segment mainly comes from corporate users, but policy uncertainty may constrain long-term deployment.
The residential solar segment continues to decline with its 1.106 MW DC capacity having dropped 13% YoY and 4% QoQ, as it reels under the effects of high interest rates and economic uncertainty. California, the state with the largest installed residential solar capacity, added 255 MW DC – its lowest quarterly capacity since Q3 2020.
California’s 2.0 Net Energy Metering (NEM) projects coming online contributed 486 MW DC of capacity to the commercial solar segment, which grew 4% YoY. It was a 28% decrease from the last quarter.
There was a significant decline in the community solar segment, whose 244 MW DC of additions represented a 22% annual and a 71% sequential decline.
The report writers project an average annual addition of over 45 GW DC capacity, tripling the country’s total solar capacity from 236 GW DC in 2024 to 739 GW DC by 2035, based on current data. This guidance does not take into account potential tax credit changes if the budget reconciliation bill is cleared in its present form (see US House Passes Bill Threatening Clean Energy Incentives).
“If Congress fails to fix the legislation passed by the House – which would render the energy tax incentives unusable – lawmakers will trigger a dangerous energy shortage that will raise our electric bills and stop America’s manufacturing boom in its tracks,” said SEIA President and CEO Abigail Ross Hopper. “The Senate still has time to get this right and secure President Trump’s vision for American energy dominance.”
The SEIA already projects trouble for nearly 300 solar and storage factories under such a scenario (see SEIA: 300 Solar & Storage Factories At Risk With US Legislation).
“If Congress cuts energy tax incentives, SEIA’s analysis projects that energy production will fall 173 TWh and the United States will not be able to meet demand or compete with China in the global race to power AI,” reads the report.
