U.S. Solar Market Adds 10.8 GW in Q1 2025, Faces Policy Uncertainty

In the first quarter of 2025, the U.S. solar sector reached a major milestone, adding 10.8 gigawatts (GW) of new electricity generation capacity, as outlined in the latest Solar Market Insight report from the Solar Energy Industries Association (SEIA) and Wood Mackenzie. This growth cements solar, along with energy storage, as the dominant force in America's energy expansion, contributing to 82% of all new capacity connected to the grid during the quarter.

This surge wasn’t limited to installations alone. The U.S. also expanded its domestic manufacturing capabilities, with 8.6 GW of new solar module manufacturing capacity coming online—the third-largest quarterly gain in the nation’s history. This growth stemmed from the opening or expansion of eight facilities across Texas, Ohio, and Arizona. Additionally, a new plant in South Carolina helped double the country’s solar cell production capacity to 2 GW.

Despite this progress, the industry faces mounting challenges. Uncertainties surrounding new tariffs and potential revisions to federal energy tax credits are creating instability and could jeopardize long-term industry momentum.

“Solar and storage are at the forefront of U.S. energy growth, increasingly supported by domestically produced technology,” remarked SEIA President and CEO Abigail Ross Hopper. “However, the path forward is at risk. The House-passed legislation could neutralize crucial tax incentives, leading to energy shortages, higher consumer bills, and a stall in America’s manufacturing renaissance. There’s still time for the Senate to take corrective action and fulfill President Trump’s goal of energy leadership.”

The industry is particularly concerned about new anti-dumping and countervailing duties (AD/CVD) targeting Southeast Asian solar components. Combined with unpredictable tariff policies and potential reductions in federal support, these pressures could significantly slow solar deployment, threaten jobs, and force factory shutdowns.

“Installing 10.8 GW in a single quarter highlights solar’s growing influence in U.S. energy generation,” said Zoë Gaston, Principal Analyst at Wood Mackenzie. “Yet the market has not reached its full potential. Our data shows that if these policy risks materialize, the pace of solar growth could decline sharply, leading to supply challenges and missed opportunities in building a resilient energy future.”

Projections from SEIA and Wood Mackenzie indicate a nationwide downturn in solar deployment—already factoring in current tariffs, but not yet accounting for potential tax credit rollbacks. While community solar figures remain stable, all other sectors show downward revisions compared to previous forecasts, with residential solar seeing a 14% drop and utility-scale installations down by 6%. If the tax incentives are weakened further, the negative impact on the industry would deepen.

In a separate analysis, SEIA examined the potential consequences of the reconciliation bill passed by the House. Should it be enacted as law, the U.S. could face significant energy shortages. The report estimates the loss of 330,000 jobs (both current and projected), closure or cancellation of 331 manufacturing facilities, and the disappearance of $286 billion in planned local investments. Additionally, consumer electricity costs could climb by $51 billion nationwide.

The study also highlights a broader strategic risk: without robust energy incentives, the U.S. could fall behind in global competition—especially in powering emerging technologies like artificial intelligence. SEIA projects a drop of 173 terawatt-hours in energy output if tax credits are slashed, potentially leaving the U.S. unable to meet rising energy demand.

Regionally, Texas continued to lead the nation in solar deployment in Q1 2025, while Florida surpassed California to claim the second spot. Interestingly, eight of the top ten solar-adding states this quarter—Texas, Florida, Ohio, Indiana, Arizona, Wisconsin, Idaho, and Pennsylvania—were carried by Donald Trump in the 2024 presidential election.