Solar Industry Shines in Early 2025 Amid Legislative Challenges Ahead

Solar Shines Brightly in 2025, but Clouds Ahead?

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### Solar Shines Brightly in 2025, but Clouds Ahead?

By Kennedy Maize

Despite facing challenges from an administration that seems skeptical of an “all of the above” energy policy, the solar industry performed impressively in the first quarter of 2025. Solar power contributed to an impressive 69% of all electric generating capacity added to the U.S. grid during this period.

A recent analysis by the Solar Energy Industries Association, the industry’s lobbying group, in collaboration with the Wood Mackenzie data and consulting firm, revealed that “the U.S. solar industry added 8.6 gigawatts (GW) of new solar module manufacturing capacity in Q1 2025, marking the third-largest quarter for new manufacturing capacity on record.” In total, the industry installed 10.8 GW of new electricity generating capacity during this quarter. Both solar and storage together accounted for 82% of all new generating capacity added to the grid. However, this 10.8 GW figure represents a 7% decrease compared to the first quarter of 2024 and a significant 43% decline from the fourth quarter of 2024.

The addition of 8.6 GW of new manufacturing capacity brings the U.S. total to 51 MW. Nonetheless, “growth in upstream manufacturing capacity remains slow or non-existent.” Notably, ES Foundry became only the second domestic cell manufacturer after opening a 1 GW cell factory in South Carolina in January. There were no new polysilicon or wafer manufacturing facilities that came online in Q1.

Texas, which is heavily reliant on natural gas, saw the most significant growth, adding +2.7 GW, which is 92% greater than the second-ranked state, Florida. In both states, growth was primarily driven by utility-scale projects.

The solar market is continuing to shift towards utility installations rather than rooftop solar. According to the report, the residential sector installed 1,106 MW of new capacity in the first quarter, a decline of 13% year-over-year and 4% quarter-over-quarter. High interest rates and economic uncertainty have significantly dampened demand. California remains the leader in residential solar installations, contributing 255 MW, although this figure marks the state’s lowest quarterly capacity since Q3 2020.

Community solar, which has gained attention in recent years, added 486 MW, representing a 22% decline year-over-year and a 71% drop quarter-over-quarter. Strong community solar growth in Maine and New York at the end of 2024, driven by changes in net metering and reduced interconnection backlogs, has not been sustained, leading to significant capacity drops in Q1 for both states.

In a news release, Abigail Ross Hopper, CEO of SEIA, praised solar’s first quarter achievements but cautioned about looming challenges for the industry. “Solar and storage continue to dominate America’s energy economy, adding more new capacity to the grid than any other technology, increasingly utilizing American-made equipment. However, our success is at risk. If Congress fails to amend the legislation passed by the House—which would render energy tax incentives unusable—lawmakers could trigger a dangerous energy shortage that would increase our electric bills and halt America’s manufacturing boom. The Senate still has time to rectify this situation and secure President Trump’s vision for American energy dominance.”

Wood Mackenzie analyst Zoë Gaston indicated that their analysis suggests the U.S. solar market has not yet reached its full potential. Proposed changes to federal tax incentives, along with ongoing tariff concerns, could significantly influence this growth trajectory and potentially lead to energy supply challenges. It is crucial to recognize the vital role of solar in America’s energy landscape.

A separate analysis by SEIA regarding the House-passed reconciliation bill concluded that the legislation could result in the loss of 330,000 current and future jobs in America, the closure or stalling of 331 factories, and a potential disappearance of $286 billion in local investments. The bill could also trigger significant energy inflation, raising consumers’ electricity costs by $51 billion nationwide.

If the House bill is enacted, which seems unlikely as the Senate reviews it, SEIA warned that the United States “will not be able to meet demand or compete with other nations in the global race to power AI.”