Key Considerations for Solar Investors in the U.S. Market by 2025

What Matters for US Solar Investors in 2025
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The commercial solar landscape in the United States is evolving, influenced by new policies, changing incentives, and increasing investor interest. For international real estate investors with assets in the US, solar in 2025 presents both a hedge and a promising opportunity for high returns. Despite various challenges, the fundamental aspects of solar energy remain solid: it is affordable, a leading market contender, quick to deploy, and enjoys bipartisan support with proven longevity.

### Solar’s Growth Trajectory

Solar is the fastest-growing energy source in the nation, accounting for an impressive 81.5% of all new electricity capacity added to the grid in 2024. Nevertheless, solar still represents only about 5% of total generation, indicating substantial potential for growth. Industry and government forecasts suggest that solar could comprise approximately 40% of the US energy mix by 2050. This optimistic outlook is primarily fueled by two key drivers: the increasing demand for energy and the attractive economics of solar technology. Today, solar stands as the most cost-effective source of unsubsidized energy, thanks to a long-term decline in panel prices driven by global economies of scale.

### Current Challenges and Opportunities

While the current administration, led by President Donald Trump, has introduced some headline risks, these have not yet caused significant changes to the economic fundamentals of solar energy. Trump’s energy strategy appears to lean heavily on traditional fossil fuels, creating a potential risk for the renewable sector. His administration’s focus includes establishing the National Energy Dominance Council, halting federal support for many renewable projects, and advocating for increased oil and gas production, all of which may hinder solar’s growth.

To genuinely achieve energy dominance, the administration would benefit from supporting solar initiatives, such as affirming investment tax credits, reforming the interconnection process to expedite grid connections, and maintaining crucial aspects of the Inflation Reduction Act (IRA), especially regarding credits and their transferability. Retaining these supports largely hinges on maintaining the current policy landscape.

### The Case for Solar

Solar energy offers numerous advantages:

– **Domestic Production**: Solar energy is generated locally, relying on a free and unlimited resource, making it immune to global supply shocks. The US has seen a surge in domestic solar production, which has been further bolstered by tax incentives from the IRA.

– **Job Creation**: The solar industry currently employs over 250,000 Americans, including 34,000 manufacturing jobs, a figure projected to triple by 2033.

– **Cost-Effectiveness**: With panel prices steadily declining, solar has emerged as the most economical source of unsubsidized energy, capturing a significant market share in recent years.

– **Quick Deployment**: Solar and battery storage represent 81% of the active interconnection queues across the country, significantly outpacing natural gas.

### Legislative Support and Market Dynamics

Recent discussions highlight a growing recognition within the Republican party of the value of clean energy. In March 2025, a group of 21 House Republicans expressed support for the IRA’s clean energy tax incentives, emphasizing the importance of maintaining these incentives to avoid political backlash.

Despite this support, the solar industry remains vulnerable to uncertainties. A significant percentage of investors (84%) and developers (73%) indicated they would reduce their investments if there were continued uncertainties surrounding tax credits and the IRA.

### Key Influencing Factors for 2025

Three major factors could impact the solar economics in 2025:

1. **Electricity Rates**: The US Energy Information Administration (EIA) projects a 7% average increase in wholesale power prices across most regions, driven by rising demand and stable supply. Higher electricity rates enhance returns for solar owners through avoided costs.

2. **Tariffs**: In 2024, around 80% of the solar panels installed in the US were imported. The US Department of Commerce’s recent rulings on antidumping and countervailing duties could affect pricing, but a significant stockpile held by US installers may mitigate immediate impacts.

3. **Domestic Content Manufacturing**: The US has rapidly become the third-largest producer of solar modules, with production capacity increasing from 7GW in 2020 to 56GW today. Utilizing domestic components may qualify projects for additional tax credits, enhancing overall returns.

### Current Market Insights

SolarKal’s marketplace, encompassing approximately 200 vendors, provides insights into current industry conditions. Recent bids indicate stable lease rates and EPC prices, with strong participation from developers. However, some vendors are adopting a cautious approach regarding ITC adders for third-party lease rates due to ongoing political uncertainties.

### Conclusion

If the Trump administration aims to achieve genuine energy dominance, it is crucial to recognize solar as a vital component of the energy strategy. Solar is not merely a partisan issue; it is a practical solution that is quick to deploy, cost-effective, and already fostering economic and job growth across the nation. With the potential for rising electricity rates, robust domestic manufacturing, and improved tax credits, solar installations can significantly enhance net operating income and asset value, offering property owners an opportunity to benefit with minimal upfront costs.

Now is the time for investors to act before the window for optimal incentives begins to close. The US solar market remains among the most appealing global investment environments, provided that investors are proactive, understand the policy landscape, and collaborate with knowledgeable advisors.