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U.S. Solar Installations Fall in Q2 2025 Amid Policy Shifts and Rising Costs

The U.S. solar industry installed 7.5 GW in Q2 2025, marking a 24% year-on-year and 28% quarter-on-quarter decline, according to Wood Mackenzie and SEIA. Utility-scale solar led with 5.7 GW, but still fell 28% YoY. Only the commercial solar segment grew, supported by California’s earlier net metering (NEM 2.0) projects.

Residential solar added just over 1 GW, down 9% YoY, hit by high interest rates, bankruptcies, and policy uncertainty. Community solar fell to 174 MW, the lowest since 2021, due to declining pipelines in states like New York.

Policy changes under the OBBBA Act are reshaping incentives. Section 48E, 45Y, and 25D tax credits will phase out by 2025–2027, while stricter Foreign Entities of Concern (FEOC) rules and new permitting guidance add uncertainty. The removal of the Five Percent Safe Harbor test for projects over 1.5 MW has raised risks for developers.

Costs are also rising: residential system prices grew 2% YoY to $3.36/W, while tariffs and trade cases pushed module costs higher.

Despite short-term hurdles, forecasts project 246 GW of new solar by 2030, with developers rushing to qualify for tax credits before deadlines. Long-term fundamentals remain strong, though risks of delays and lower capacity remain under restrictive scenarios.