Distributed solar installations in the U.S. declined 11% in 2024, weighed down by a 25% drop in residential solar, or possibly as much as 31%, compared to 2023.
However, according to Ohm Analytics, commercial and industrial (C&I) solar and community solar bucked the trend, growing by 18% and 42%, respectively. Community solar saw particularly strong momentum in the fourth quarter, surging 72% year-over-year.
Source: Ohm Analytics
Ohm Analytics’ Q4 24 DG Solar & Storage Market Report presents a curve that might suggest a return to growth in 2025, but the picture is more complex. The distributed market peaked in late 2022, when over 2.5 GW was deployed in the fourth quarter, but rising interest rates created serious financial strain in 2023. This led to bankruptcies, such as Sunlight Financial, and a wave of industry consolidation.
Despite these challenges, 2023 still posted a 9% growth rate, fueled largely by California’s Net Metering 2.0 “goldrush”, as homeowners and businesses rushed to install systems before policy changes took effect.
In contrast, 2024 was a year of reckoning, marked by an industry-wide shakeout that included Sunpower’s bankruptcy and Lumio’s bankruptcy, followed by its acquisition by Zeo Energy. However, some of that pain is continuing into 2025, as Sunnova’s financial struggles have raised questions about its ability to stay afloat.
Despite these challenges, C&I and community solar rebounded, breaking out of a three-year stagnation. As a result, the total distributed solar capacity installed in 2024 reached 8.4 GW—5.1 GW residential, 2.0 GW C&I, and 1.3 GW community solar—making it the third-highest year on record despite the sector’s overall decline.
Looking ahead, growth may tighten.
While 2024’s C&I expansion was impressive, Ohm Analytics warns that it was driven largely by California’s 2023 net metering surge. Many of these projects will continue to be installed through 2026, but they aren’t expected to sustain positive growth in 2025. Outside of California, C&I installations grew 11%, with New York adding 67 MW.
Community solar growth was concentrated in Maine, New York, and Illinois, but future expansion depends on favorable state policies.
Ohm Analytics warns that the residential market could face additional headwinds in 2025, recently revising its already lowered forecast downward. Persistent high interest rates, along with California’s ongoing net metering challenges, are expected to slow the industry overall.
Further complicating the landscape are challenges in third-party ownership models, particularly Sunnova’s slow-moving financial crisis. The struggling solar provider recently announced a leadership shakeup as part of its efforts to stabilize cash flow, but its financial troubles have already created ripple effects across the industry, adding uncertainty for smaller installers that rely on third-party financing models.
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