The U.S. solar industry installed 10.8 GW of capacity in the first quarter (Q1) of 2025. Despite declining both 43% quarterly and 7% annually, this was the fourth-best quarter on record, according to the U.S. Solar Market Insight Q2 2025 report released by the Solar Energy Industries Association (SEIA) and Wood Mackenzie.

Photovoltaic solar accounted for 69% of all new electricity-generating capacity in the quarter, maintaining its dominant role in U.S. power additions.

Utility Installations

Utility-scale solar installations reached 9 GW in Q1 2025, representing a 7% YoY decline. Texas, Florida, Ohio, Indiana, and California accounted for over 65 % of the installations. Contracted projects totaled 5.7 GW, a 2% YoY increase. Large corporate buyers, including Meta, Amazon, and Verizon, secured 55% of the contracts, primarily in Texas, with Meta leading the way.

Wood Mackenzie forecasts 199 GW of new utility-scale capacity between 2025 and 2030. While 2024 momentum is expected to continue into 2025, installations are anticipated to plateau and decline from 2026 due to pipeline contraction, policy and tariff uncertainties, potential changes in federal tax incentives, and ongoing trade disputes affecting imports. Additional challenges include initiatives favoring gas projects and market caps, posing risks to utility-scale solar.

Utility-scale solar system prices rose in Q1 2025, with fixed-tilt systems at $1.08/W and single-axis tracking systems at $1.23/W, marking 3% and 4% increases, respectively. Engineering, procurement, and construction costs increased by 20% due to labor shortages, prolonged equipment lead times, tariff changes on steel and imports, and compliance burdens associated with prevailing wage and domestic content rules.

Module prices also rose 4% to $0.32/W, driven by the Department of Commerce’s anti-dumping (AD)/countervailing duties (CVD) findings on imports from Southeast Asia. However, the growing adoption of tunnel oxide passivated contact (TOPCon) modules helped offset cost increases by reducing equipment and labor needs through higher efficiency.

Distributed Solar Plus Storage

Solar-plus-storage continues to gain traction in the U.S. solar market, accounting for a record 38% of residential solar installations during the quarter, up from 32% in Q4 2024. This represents a 10% quarter-over-quarter (QoQ) growth in residential solar plus storage installations despite an overall 4% contraction in the residential solar market.

Non-residential solar plus storage deployments remained steady, with approximately 213 installations, compared to 220 in the same period last year. California led with 15 MW of commercial solar-plus-storage deployed, followed by Puerto Rico with 1.3 MW, Arizona with 250 kW, and Rhode Island with 200 kW.

Residential PV

The residential solar market added 1,106 MW in Q1 2025, representing a 13% YoY decline and a 4% QoQ decrease. Installation drops occurred in 22 states compared to Q1 2024. California led with 255 MW despite its lowest quarter since 2020, followed by Puerto Rico and Florida.

Market challenges persist due to supply chain issues tied to tariffs, potential tax credit eliminations, and high interest rates, which are causing uncertainty and dampening hopes for a recovery. The five-year residential outlook was lowered by 9%, anticipating a slight contraction in capacity compared to 2024.

Proposed changes in the House reconciliation bill threaten tax credits under Sections 25D and 48E, creating additional risks. Still, residential solar retains strong long-term potential with national penetration below 10%. The base forecast anticipates an average annual growth rate of 9% from 2025 to 2030, driven by rising retail electricity rates and concerns about resiliency.

Residential solar system prices remained relatively stable in Q1 2025 at $3.36/W. This represented a $0.01/W decrease in QoQ, reflecting a 0.2% drop.

Commercial Installations

Commercial solar installations set a record for Q1, reaching 486 MW, a 4% YoY increase despite a 28% drop from Q4 2024’s year-end surge. Growth was fueled by California’s NEM 2.0 projects, with significant contributions from Illinois, New York, Pennsylvania, and Texas. Developers are maintaining project activity amid federal uncertainties, including the early sunsetting of the Section 48E Investment Tax Credit and possible changes to transferability.

The commercial solar five-year forecast was cut by 4% due to tariff impacts on pricing. California’s NEM 2.0 projects continue to come online more slowly than expected, resulting in a high installation volume of over 700 MW in 2025 but leading to an anticipated state-level contraction in 2026. The segment is expected to recover and grow at an average annual rate of 12% from 2027 to 2030. This growth will be supported by rising electricity prices and the emergence of new markets in the country’s Midwest and Southeast regions.

Community Installations

Community solar installations declined 22% YoY in Q1 2025 to 244 MW. Maine and Massachusetts experienced steep drops of 85% and 78%. New York’s volumes declined slightly, although they still account for 52% of the market. The national community solar market is expected to contract by 22% in 2025, following a strong 2024, but is projected to remain above 2023 levels, reaching approximately 1.5 GW. New York and Illinois will lead capacity additions, with new programs in New Jersey and Maryland gaining momentum.

Manufacturing

The U.S. solar-grade polysilicon sector remains largely stagnant. Only Hemlock Semiconductor and Wacker Chemie continue production, while REC Silicon shut its Moses Lake plant in late 2024 after failing to produce a usable product. Highland Materials plans to commence construction at its Tennessee facility in 2026, with production scheduled to begin in 2027.

U.S. polysilicon capacity peaked at 55,900 metric tons in Q4 2024 but dropped to 41,500 metric tons in Q1 2025 due to the closure of REC. Solar wafer production has yet to be onshored, though Qcells and Corning aim to start in late 2025.

Domestic cell production grew as ES Foundry’s South Carolina factory came online in January, raising the capacity to 2 GW. This capacity could rise to 9.3 GW by the year’s end, with new facilities from ES Foundry, Qcells, and Silfab. Other companies, such as Boviet Solar and Canadian Solar, plan to begin cell production in 2026 or later.

The U.S. added 8.6 GW of solar module manufacturing capacity in the first quarter, bringing the total to 51 GW. Further expansions could raise capacity to 88 GW by year-end, though many announced projects are not yet under construction.

Component Pricing

Polysilicon prices rose slightly in Q1 2025 due to low manufacturing utilization, though they remain below 2023 levels. Chinese polysilicon increased from $4.71/kg to $5.36/kg in price, while non-Chinese polysilicon rose from $17.23/kg to $18.59/kg. Prices for n-type wafers and TOPCon cells remained steady at $0.05/W and $0.07/W, respectively, due to weak demand.

Module prices from Southeast Asia jumped in Q1, driven by the AD/CVD case affecting imports from Cambodia, Malaysia, Thailand, and Vietnam. Passivated emitter and rear cell (PERC) modules rose to $0.30/W and TOPCon modules to $0.34/W. U.S. module imports fell 55.8% YoY to 6.6 GW.

Domestic module production hit record levels with 7.5 GW in Q4 2024 and 6.5 GW in Q1 2025, contributing to price competition. Utility-scale PERC modules made in the U.S. dropped to $0.30/W, while distributed generation PERC modules fell to $0.33/W.

The microinverter market experienced a 3% QoQ price increase, reaching $0.43/W, as Enphase ramped up domestic production. Single-phase string inverter prices remained at $0.17/W, while three-phase string inverters dropped 5% to $0.08/W. Central inverter prices fell 1% from the previous quarter and nearly 20% YoY, averaging $0.051/W due to improved power density.

Residential racking prices stayed flat at $0.11/W. Commercial rooftop racking increased by 8% to $0.11/W due to larger module sizes. Ground-mount systems, mainly domestically sourced to meet content requirements, saw slight declines, with fixed-tilt and single-axis trackers averaging $0.09/W and $0.15/W, respectively.

Market Outlook and Risks Through 2030

The U.S. solar market is expected to add over 250 GW by 2030 in the base case, but significant downside risks remain. Federal policies and trade actions present uncertainty, including current 25% tariffs on Canada and Mexico and anticipated 30% tariffs on China for 2025-26, alongside 10% tariffs on other countries.

While tariffs have a minimal impact on installations in 2025, headwinds cause declines across all segments. Residential installations are expected to decline slightly following a 30% drop in 2024 due to the impact of high interest rates and market pressures. Commercial capacity is expected to drop 4% as California’s NEM 2.0 backlog clears and growth in mature markets slows. Community solar is expected to contract by 22%, and utility-scale solar will decline by 2% after two years of gains.

Between 2025 and 2030, the industry is projected to contract at a rate of 2% annually yet still add nearly 43 GW on average each year. Installations will decline by 7% annually from 2025 to 2027 before recovering with a 3 GW growth from 2028 to 2030. The recovery will be driven by domestic supply chain shifts and increased electricity demand from AI and data centers, though labor shortages and interconnection delays remain barriers.