US Solar Expansion Set to Slow Amid Federal Policy Shifts and Tariff Pressures

WASHINGTON: Growth in U.S. solar energy is expected to slow over the next five years due to shifting federal priorities favouring fossil fuels, increased tariffs, and looming legislative threats, according to a new report released Monday by the Solar Energy Industries Association (SEIA) and Wood Mackenzie. The forecast projects that newly installed solar capacity in 2030 will be more than 10 per cent lower than in 2025, marking a significant deceleration for an industry that has seen rapid expansion in recent years. The decline is attributed to multiple headwinds, including new federal tariffs on key materials such as steel and aluminium, components critical to solar infrastructure.

The report does not yet account for potential cuts to clean energy tax incentives proposed in a Republican-backed budget bill currently under debate in Congress. If enacted, these cuts could further undermine the industry’s momentum, SEIA warned. The Inflation Reduction Act (IRA) of 2022, passed under the Biden administration, provided substantial tax credits that helped fuel a surge in solar project investments and manufacturing. However, recent political developments pose a risk to these incentives. The bill passed by the House last month aims to repeal several IRA provisions — a move that could drastically reshape the solar landscape.

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“Look at all of this that could be,” said SEIA President Abigail Ross Hopper. “And the Congress is threatening all of this development.” In the first quarter of 2025, the U.S. solar sector installed 10.8 gigawatts (GW) of capacity — a 7% year-over-year drop, yet still close to historic highs. The same period saw the opening or expansion of eight solar manufacturing facilities across states like Texas and Ohio, signalling ongoing industrial investment despite policy uncertainty.

Overall, solar power made up 69 per cent of all new electricity generation in the latest quarter. SEIA forecasts total solar installations to reach 48.6 GW in 2025, before declining to 43.5 GW by 2030. Corporate demand for utility-scale solar projects is expected to continue supporting the sector, though policy instability remains a critical concern. The utility-scale segment accounted for 9 GW of installations in Q1 alone, with five states — Texas, Florida, Ohio, Indiana, and California — contributing 65 per cent of that total. On the residential front, installations fell 13 per cent to 1.1 GW in the first quarter. The segment has struggled with higher interest rates, state-level policy shifts, and increased material costs. 

Nonetheless, residential solar is expected to rebound between 2025 and 2030, driven by rising electricity prices that make rooftop systems more appealing to homeowners. Meanwhile, former President Donald Trump has pledged to repeal clean energy tax credits if re-elected, calling them costly and detrimental to business. His administration favours a return to fossil fuel expansion, potentially sidelining renewables like solar and wind. Despite these challenges, industry leaders remain cautiously optimistic. “There are still plenty of positive signs,” Hopper added. “But the direction of federal policy will determine whether this industry continues to thrive or stalls out.”