The U.S. added 11.4 GW of solar capacity in the second quarter (Q2) of 2026, a 45% year-over-year (YoY) increase and a 43% quarter-over-quarter (QoQ) increase, according to the US Solar Market Insight Q3 2026 report by Wood Mackenzie and the Solar Energy Industries Association (SEIA).

Installations rebounded sharply from a seasonally weak first quarter, driven primarily by utility-scale projects.

Solar and battery storage together accounted for 70% of all new power-generating capacity added in the U.S. during the first half (1H) of 2026. Solar alone accounted for 45% of new generating capacity.

The report attributed the strong utility-scale installations to developers building safe-harbored project pipelines ahead of federal tax credit deadlines. Distributed solar segments continued to weaken YoY as the market adjusted to the expiration of the Section 25D residential tax credit at the end of 2025.

Utility-Scale Solar

Utility-scale solar installations reached 9.6 GW in Q2, increasing 61% YoY and 56% QoQ.

Texas led installations during the quarter with 1.7 GW, followed by Arizona with 1.4 GW and Michigan with 0.9 GW.

Developers contracted 4.9 GW of utility-scale solar capacity during the quarter, down 8% YoY. Contracting activity was concentrated in Utah, Texas, Arkansas, Oklahoma, and Washington. Data and technology companies continued to account for most new offtake agreements.

Wood Mackenzie expects the utility-scale segment to add 217 GW of capacity through 2031. Improved visibility into safe-harbored project pipelines resulted in an upward revision of 7.5 GW to the forecast through 2031, with the increases concentrated in Texas, Arizona, California, and Illinois.

The July 4, 2026 begin-construction deadline has passed, establishing a safe-harbored pipeline of between 216 GW and 240 GW. The pipeline is expected to support installations through 2030 even after accounting for project attrition. Developers that missed the deadline now face a placed-in-service deadline of December 31, 2027.

Residential Solar

Residential solar installations totaled 995 MW in Q2, declining 12% YoY and 10% QoQ. This was the segment’s lowest quarterly installation level in five years.

Wood Mackenzie expects 1.6 GW of new residential interconnections during the second half of 2026, compared with 2.1 GW in the first half.

The research firm now forecasts residential solar installations to contract 23% in 2026, compared with a 21% decline projected in the previous quarter.

Installers have struggled to shift from cash and loan sales to third-party ownership models. Tax equity scarcity, limited availability of prepaid products, longer sales cycles, and declining close rates have also weighed on the segment.

The residential market is expected to return to growth in 2027 and expand at an average annual rate of 6% between 2027 and 2031.

California and Illinois led residential installations during Q2. Installed capacity in 1H increased 8% YoY in California and 38% in Illinois. However, permits declined 25% and 20%, respectively, indicating weaker installations ahead.

Commercial and Community Solar

Commercial solar installations totaled 638 MW in Q2, increasing 11% YoY and 27% QoQ.

California accounted for 256 MW of installations, supported by the remaining Net Energy Metering 2.0 project pipeline. Illinois, New York, Texas, and Ohio accounted for more than 150 MW combined.

Wood Mackenzie expects the commercial segment to contract by an average of 7% over 2026 and 2027 before growth accelerates from 2028 through 2030 as developers commission safe-harbored projects before their four-year eligibility windows expire.

Community solar installations totaled 231 MW during Q2, falling 14% YoY and 8% QoQ.

New York’s community solar installations declined 70% YoY during 1H 2026. Poor site availability, high upgrade and interconnection costs, and weakening incentive levels have constrained development in the state.

Illinois installed 112 MW during Q2, surpassing New York and recording its strongest second quarter. The state’s community solar project pipeline now exceeds 2 GW.

The national community solar market is expected to remain largely flat in 2026 at approximately 1.7 GW, supported by an 8.2 GW safe-harbored pipeline. Wood Mackenzie expects national community solar installations to decline by an average of 12% annually beginning in 2028 without new or expanded programs.

Manufacturing and System Pricing

U.S. domestic module manufacturing nameplate capacity stood at approximately 66 GW at the end of Q2. Only about 1 GW of new module manufacturing capacity came online during the quarter.

Solar system prices increased YoY across all segments except residential.

Residential system prices declined 1.4% YoY to $3.36/W, while commercial system prices increased 5.6% to $1.77/W. Utility-scale fixed-tilt system prices increased 0.9% to $0.95/W, while single-axis tracking system prices rose 2% to $1.06/W.

Module prices for distributed solar declined by an average of 16% YoY to $0.37/W. Utility-scale module prices declined 2% to $0.33/W as procurement shifted toward more expensive domestic supply.

However, logistics costs increased by more than 15% on average across market segments. Section 232 tariffs on copper, steel, and aluminum also increased electrical and structural balance-of-plant costs.

Market Outlook

Wood Mackenzie’s U.S. solar outlook for 2026 through 2031 increased by 1.2%, primarily due to upward revisions in the utility-scale segment.

The U.S. solar fleet is expected to approximately double over the next five years. However, annual additions are expected to remain broadly flat at around 44 GW as permitting and interconnection bottlenecks constrain growth despite increasing electricity demand.

Texas ranked first for total solar installations in 1H 2026 with 3.44 GW, followed by Arizona with 1.76 GW and Florida with 1.61 GW.

The U.S. solar industry added 43.2 GW of new capacity in 2025, a 14% decline from 2024.