Solar industry posts record Q1 growth but projects longer-term decline

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The solar industry in the U.S. experienced significant growth in the first quarter of 2025, doubling its solar cell manufacturing capacity and adding 8.6 GW of solar module manufacturing capacity, according to a report by Wood Mackenzie for the Solar Energy Industries Association (SEIA). However, despite these strong figures, the industry is projected to contract by about 2% annually from 2025 to 2030, with new installations expected to decline by 7% between 2025 and 2027. This contraction is largely attributed to the potential wind-down of federal clean energy tax credits, which could lead to project cancellations and an energy shortage.

While demand for solar energy remains high, particularly from data centers, the future of solar development is uncertain due to proposed cuts to tax credits that could undermine the economic viability of new projects. SEIA's Sean Gallagher emphasized that the growth of domestic solar manufacturing is heavily dependent on federal incentives, and any reduction in these supports could jeopardize the industry's revival. The current legislative proposals could significantly impact the solar sector, potentially leading to a dangerous energy shortage if new installations are suppressed.