US Solar and Storage Industry Faces Policy Challenges Despite Strong Q1 Performance

Policy Concerns Cloud Positive Q1 for US Solar and Storage
By Ben Willis
June 9, 2025

Despite a strong start to 2025, growing political challenges threaten to hinder US solar manufacturing and project deployment. According to the latest quarterly US Market Insight report from the Solar Energy Industries Association (SEIA) and analysts at Wood Mackenzie, the industry experienced positive growth in Q1 2025, marked by increases in module and cell production as well as robust project deployment.

Key highlights from the report include the addition of 8.6GW of new module manufacturing capacity across eight new or expanded factories located in Texas, Ohio, and Arizona, making it the third-largest quarter for new module capacity. Additionally, cell production capacity in the US doubled to 2GW with the opening of a new factory in South Carolina. In terms of project deployment, the US solar industry added 10.8GW of new generating capacity to the grid in Q1 2025.

However, SEIA CEO Abigail Ross Hopper cautioned that these achievements could be jeopardized by evolving policy matters. “Solar and storage continue to dominate America’s energy economy, adding more new capacity to the grid than any other technology, all while using increasingly American-made equipment. Yet, our success is at risk. If Congress does not resolve the issues created by the legislation passed by the House, which would make energy tax incentives unusable, lawmakers may spark a dangerous energy shortage, leading to increased electric bills and halting America’s manufacturing growth. The Senate still has the opportunity to rectify this situation and fulfill President Trump’s vision for American energy dominance.”

The report pointed to the general tariffs imposed by President Trump and new anti-dumping and countervailing duties (AD/CVD) on cells and modules imported from Southeast Asia as significant sources of uncertainty for the industry. Furthermore, the ongoing budget reconciliation bill in Congress could jeopardize solar deployment and manufacturing in the US, potentially resulting in energy shortages, job losses, and factory closures. The SEIA has estimated that if the bill passes in its current form, around 330,000 jobs could be at risk, many in regions that supported the Republican president in the last election.

“The 10.8GW of solar capacity installed in Q1 2025 marks a substantial contribution to new US electricity generation, underscoring solar’s increasing dominance in the energy mix,” stated Zoë Gaston, principal analyst at Wood Mackenzie. “However, our analysis indicates that the US solar market has not yet reached its full potential. Proposed changes to federal tax incentives, combined with ongoing tariff issues, could significantly impact this growth trajectory and lead to energy supply challenges. It is crucial to recognize the vital role of solar in America’s energy landscape.”

Considering the tariffs projected to impact the industry in the second quarter of this year, the SEIA and Wood Mackenzie’s five-year forecast predicts a nationwide decline in deployment across all segments, except for community solar, which is expected to remain stable. Anticipated reductions include a 14% decrease in residential solar deployment and a 6% fall in utility-scale deployment. Importantly, these forecasts do not factor in any potential rescinding of federal tax credits; should such cuts accompany the tariffs, the damage to the industry could “unequivocally worsen,” according to the organizations.

In terms of geographic distribution, Texas led all states in added capacity during Q1, with Florida surpassing California for the second spot. Of the ten states with the highest installations in Q1, eight were won by Trump in the 2024 elections: Texas, Florida, Ohio, Indiana, Arizona, Wisconsin, Idaho, and Pennsylvania.