The U.S. Solar Market Insight Q2 2025 report released in June 2025 by the Solar Energy Industries Association (SEIA) and Wood Mackenzie, a global insight business for renewables, energy and natural resources, indicates that the U.S. solar industry added 8.6 gigawatts (GW) of new solar module manufacturing capacity in Q1 2025. This is the third-largest quarter for new manufacturing growth on record.

According to the report, the U.S. solar industry installed 10.8 GW of new electricity generating capacity in Q1, bringing the nation’s total solar capacity to 248 GW. Solar and storage make up 82% of all new generating capacity added to the grid.

“The 10.8 GW of solar capacity installed in Q1 2025 represents a significant portion of new U.S. electricity generation, highlighting solar’s growing dominance in the energy mix,” said Zoe Gaston, principal analyst for U.S. distributed solar at Wood Mackenzie. “However, our analysis suggests that the U.S. solar market has yet to reach its full potential. The proposed changes to federal tax incentives, along with ongoing tariff concerns, could significantly impact this growth trajectory and potentially lead to energy supply challenges.”

Residential solar declined 13% year-over-year in as of Q1 2025, influenced by concerns about high interest rates and economic uncertainty. Declines were also seen in community solar (-22% y/y) and utility-scale solar (7% y/y). Commercial solar, on the other hand, was the only segment to grow in Q1, at 4% y/y.

Despite this year’s growth, there is concern that new tariffs and proposed changes to federal energy incentives could threaten the industry. Anti-dumping and countervailing duties on cells and modules from Southeast Asia could hinder U.S. solar deployment and manufacturing. This could lead to energy shortages, job losses and factory closures.

President Trump signed the One Big Beautiful Bill Act into law on July 4. There are cuts to energy tax incentives, and SEIA’s analysis projects that energy production will fall 173 terawatt-hours.

With the tax credits rolled back, SEIA and Wood Mackenzie’s forecast projects declining deployment nationwide, which could trigger lost investment in local communities, energy shortfalls and increased energy bills. The five-year outlook for other segments forecasts a 14% reduction in residential solar deployment and a 6% reduction in utility-scale deployment.