The solar energy industry’s string of record-breaking years is about to face a challenge in the form of a White House poised to pull back the subsidies that have helped it boom.
But most analysts say the industry can weather those potential setbacks. Electricity demand is growing, the cost of deploying solar continues to come down, and there’s more domestic panel manufacturing. Those big trend lines, they say, may Trump-proof solar power, at least in the short term.
“Solar didn’t disappear eight years ago,” said Edurne Zoco, who leads the clean technology and renewables team at S&P Global Commodity Insights. “We’re still bullish about the industry’s outlook.”
S&P’s forecast predicts that the United States will install 45,000 megawatts of solar in 2025, part of a whopping 586,000 MW installed worldwide. The U.S. Energy Information Administration, meanwhile, forecasts that solar power generation will grow 75 percent between 2023 and 2025, with generating capacity even exceeding wind by the end of 2025.
A quarterly report from the Solar Energy Industries Association and Wood Mackenzie released in November found that the U.S. was on pace to install a record 40,500 MW in 2024, accounting for nearly two-thirds of all generating capacity added to the grid through the third quarter.
That growth, however, has been buoyed by a friendly policy environment. The Biden administration has unleashed tax credits and loans through the Inflation Reduction Act to bolster solar installations, and has opened up federal lands to vast new projects. The Trump administration has vowed to scale back the climate law and is poised to ramp up trade barriers that could make solar more expensive.
Here are the trends that will shape the solar industry in 2025 and beyond.
Trade wars
After years of using incentives to build up a domestic solar manufacturing base to compete with cheap Chinese imports, the Biden administration in 2024 turned to a more punitive agenda. A series of tariff decisions jacked up prices of imported solar parts from China and other Asian countries, covering almost the full range of solar components.
That’s not expected to change under President-elect Donald Trump, who has promised to add 10 percent tariffs on goods from China and has said he’d raise the prices of imported goods from other countries.
Limiting imports could be a mixed bag for solar’s outlook. A key reason the Biden administration did not enact more punitive tariffs early — and put a two-year moratorium on solar duties that expired in June last year — was because the cheap equipment was getting panels on the grid. As late as 2023, as much as 80 percent of the solar equipment installed in the U.S. was imported, and U.S. Census Bureau data showed imports had increased year over year at the start of 2024.
A Wood Mackenzie analysis in October predicted that domestically produced solar cells would cost about 41 cents per watt in 2025 and decline to 35 cents by 2032, compared with import prices in the mid-twenties.
That’s not expected to have an immediate impact on solar installations, the analysis said, but could have long-term implications if prices don’t drop further.
On the other hand, the trade policies should help boost a solar manufacturing industry already being aided by the Inflation Reduction Act. The country can produce nearly 40,000 MW of solar capacity a year, up from just 8,000 MW in 2021. According to the Department of Energy, there are now 171 solar component plants in the U.S., many of them in the South and in Midwestern states that voted for Trump in the 2024 election.
This year is expected to bring more U.S. factories up and down the solar value chain. The solar recycling company SolarCycle is opening a facility in Georgia. Materials maker Corning plans to open a wafer facility in Michigan.
“Things may not be on the schedule we had hoped, but overall our headwinds are turning into tailwinds,” said Michael Carr, executive director of the Solar Energy Manufacturers for America Coalition, which backs stronger trade measures. “And I think in broad strokes, we expect the next administration to continue that work.”
However, Carr added, full support would include keeping in place some Biden-era policies, like tax credits that reward energy companies and manufacturers for using domestic content.
“The tool chest that was built out over the last four years is there for them to use,” Carr said. “They’ve indicated a willingness to use the tariff tools. The rest will be available for them now.”
Trump 2.0
Trump largely talked up an “all of the above” energy strategy on the trail, bashing incentives for renewable energy and vowing to unleash fossil fuel development. His one prominent bit of praise for solar — he called himself a “big fan” of the technology in his September debate with Vice President Kamala Harris — was couched with criticism of its impact on desert lands.
Trump’s pick for secretary of the Treasury, Scott Bessent, has vowed to take an ax to the IRA’s tax credits, which could mean that manufacturing incentives and credits that offset the cost of large-scale solar and energy storage projects could be on the chopping block.
But many in the industry think solar may have grown too big (and too cheap) to fail, even if federal policy is out of favor for a period of time. Speaking to reporters just days after the November election, Solar Energy Industries Association President Abigail Ross Hopper said that as a “direct result of economic development,” she did not have a “dire outcome for the industry based on this election.”
Solar power accounted for two-thirds of the new capacity on the grid last year. Booming markets like California and Nevada have seen solar account for more than a quarter of total generation. Three more states get more than 15 percent of electricity from solar, according to the EIA.
Wood Mackenzie reported that the pipeline of contracted projects is nearly 100 gigawatts, meaning installations are likely to continue apace. That’s especially important as population growth, data centers and industrial construction drive demand for electricity at a shocking pace.
A December report from power sector consulting firm Grid Strategies forecasts that U.S. electricity demand could jump 16 percent in the next five years and that projected demand growth has increased by a factor of five in just two years.
A policy road map published by SEIA in December for the next administration highlighted its low prices and growing role in the U.S. by mimicking some of Trump’s muscular language.
“The path to American energy dominance needs an ‘all of the above strategy’ that includes strong solar and battery storage industries,” SEIA wrote.
Familiar hurdles
The biggest issues holding solar back may be the ones that the industry is most familiar with.
On top of that list is the red tape that can make it difficult to build any energy infrastructure. Clogged interconnection queues across the country have held back many large solar projects, as have environmental reviews for solar farms and the large transmission projects needed to support them.
A bipartisan permitting deal that could have made it easier to build large solar projects fell apart before the end of the congressional term. Congressional Republicans have said they would reexamine energy permitting in the new year, but it’s unclear if any bill would be friendly to renewable projects.
Fox Swim, an industry researcher with San Francisco-based Aurora Solar, said the industry could also face policy headwinds on the state and local level, where much of the policy driving distributed solar projects is based. Key among that is net metering policies, which determine how much rooftop solar customers are compensated for excess generation they send back to the grid.
Several states, including solar giant California, have cut back on net metering rates in response to concerns about utility costs, which in turn can make solar purchases more expensive for homeowners.
“Anyone concerned about the fate of solar in their state needs to lean on their governor, their legislature and their utility commissions to protect net metering,” Swim said.
S&P’s Zoco said that those challenges are familiar for the industry and would likely have continued regardless of the election outcome.
“The challenges that have happened before will continue, and so will the momentum for solar,” Zoco said.
