US Solar Manufacturing Surge Faces Uncertain Future Amid Potential Loss of Energy Incentives

The U.S. is currently experiencing a significant surge in solar manufacturing. But will this growth be sustainable without energy incentives?

According to a recent report, the U.S. solar industry added **8.6 gigawatts (GW)** of new solar module manufacturing capacity in the first quarter of 2025, making it the third-largest quarter for new manufacturing capacity ever recorded. This increase is attributed to eight new or expanded factories located in Texas, Ohio, and Arizona, as detailed in the **U.S. Solar Market Insight Q2 2025** report released by the Solar Energy Industries Association (**SEIA**) and Wood Mackenzie.

In addition to expanding module capacity, U.S. solar cell production capacity has doubled in the first quarter to **2 GW** with the launch of a new factory in South Carolina. The report also highlights that the U.S. solar industry installed **10.8 GW** of new electricity-generating capacity in Q1, with solar and storage accounting for **82%** of all new generating capacity added to the grid.

However, the SEIA warns that new tariffs and potential changes to federal tax credits introduce significant uncertainty for the industry, jeopardizing its long-term growth. Utilities in the Midwest are grappling with challenges such as extreme weather, outdated infrastructure, and the need to integrate renewable energy while ensuring grid reliability. Additionally, state decarbonization laws complicate the process of bringing new power generation online. As utilities transition from fossil fuels to cleaner alternatives, they must also manage supply chain issues, labor shortages, and emerging cybersecurity risks.

To address these challenges, service providers must modernize their infrastructure to meet increasing demand while keeping costs affordable—a daunting task for utilities of all sizes. A new regional DISTRIBUTECH event, **DTECH Midwest**, will offer a valuable opportunity to explore these specific issues in the power industry, with tailored content for municipal and cooperative utilities. Registration is now open for the event, scheduled for **July 14-16, 2025**, in Minneapolis, MN.

“Solar and storage continue to dominate America’s energy economy, adding more new capacity to the grid than any other technology, and increasingly using American-made equipment,” stated SEIA President and CEO Abigail Ross Hopper. “However, our success is at risk. If Congress does not address the legislation passed by the House—which would render the energy tax incentives unusable—lawmakers could trigger a dangerous energy shortage, increasing electric bills and halting America’s manufacturing boom. The Senate still has the opportunity to correct this and secure President Trump’s vision for American energy dominance.”

SEIA further noted that uncertainty surrounding tariffs, new anti-dumping and countervailing duties on solar cells and modules from Southeast Asia, and potential changes to federal energy incentives could significantly hinder U.S. solar deployment and manufacturing. This poses risks of energy shortages, job losses, and factory closures.

“The **10.8 GW** of solar capacity installed in Q1 2025 represents a substantial portion of new U.S. electricity generation, underscoring solar’s growing dominance in the energy mix,” said Zoë Gaston, Principal Analyst at Wood Mackenzie. “However, our analysis indicates that the U.S. solar market has yet to reach its full potential. The proposed changes to federal tax incentives, along with ongoing tariff concerns, could impact this growth trajectory and lead to energy supply challenges. It’s crucial to recognize the vital role of solar in America’s energy landscape.”

SEIA and Wood Mackenzie project a decline in overall deployment nationwide, factoring in tariffs imposed in Q2 but not potential rollbacks of federal tax credits. Although the community solar forecast remained stable, other segments saw reductions in their five-year outlook compared to the previous quarter, including a **14%** decrease in expected residential solar deployment and a **6%** decrease in anticipated utility-scale deployment.

A separate analysis conducted by SEIA regarding the effects of the House-passed reconciliation legislation predicts an energy shortage for the U.S. economy if the bill is enacted. SEIA warns that if lawmakers do not change course, **330,000** current and future American jobs could be lost, **331** factories might close or never open, and **$286 billion** in local investments could vanish. The bill could also lead to “massive energy inflation,” increasing consumers’ electricity costs by **$51 billion** nationwide. If Congress cuts energy tax incentives, SEIA projects that energy production could drop by **173 TWh**, leaving the United States unable to meet demand or compete with China in the global race to power AI.

According to the Solar Market Insight report, Texas led the nation in solar capacity additions in Q1 2025, with Florida surpassing California for the second position. Among the top ten states with the most solar installations during the first quarter, eight were won by President Donald Trump in the **2024** election: Texas, Florida, Ohio, Indiana, Arizona, Wisconsin, Idaho, and Pennsylvania.