The recently released U.S. Solar Market Insight Q2 2025 report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie projects that, due to tariffs levied in Q2, declining solar deployment could result in lost investment in local communities, energy shortfalls and increased energy bills for Americans.
“Rollbacks of the energy tax credits, on top of recently levied tariffs, would unequivocally worsen the damage to the solar industry,” the authors said.
The residential solar industry has already suffered some hard blows with the bankruptcies of Mosaic, a solar loan company, and Sunnova, a residential solar installer.
Patrick Moore, Mosaic chief executive officer noted the myriad problems that have recently plagued the residential solar industry. He said the bankruptcy “marks a significant step for Mosaic to address our financial position amid the macroeconomic challenges facing the residential solar industry as well as the recent legislation passed by the House that rolls back residential solar tax credits.”
Residential decline
The Q2 SEIA/Wood Mac report finds that residential solar added just over 1.1 GW in Q1 2025, a a 13% decline from Q1 2024 and 4% decline from Q4 2024. The decline was seen in 22 states, and California—long the leader in residential solar—experienced its lowest quarter in five years.
The report lists the challenges as the tariff effect on supply chain, potential elimination of tax credits and continued high interest rates.
“In addition to the 25% tariffs on Canada and Mexico, we assume settlement of tariffs over the next 90 days, including a 30% tariff rate for China in 2025 and 2026, and a 10% rate for all other countries,” said the report’s authors.
These tariff announcements have brought increased economic risk, which the report says makes consumers hesitant to make large purchases, thus affecting both the supply chain and residential solar.
The One Big Beautiful Bill, which narrowly passed in the House (215 to 214) takes a sledgehammer to clean energy tax credits, a move that created what Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA) called “unworkable legislation.” The changes that would particularly affect residential solar is the elimination of the Investment Tax Credit (25D), which had been in effect through 2034. If passed, the 25D elimination would be as of December 31, 2025. Also at risk is the elimination of 48E for third-party owned systems.
As a result of these challenges, the SEIA/Wood Mac report downgrades its five-year residential solar outlook by 9%.
The report authors remain optimistic about the residential solar market because of what it calls “significant long-term potential,” because only about 10% of the market has been penetrated. “In our base case forecast, we expect the segment to grow by 9% on average annually between 2025 and 2030, heavily driven by continued retail rate increases and resiliency concerns,” the report authors said.
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