US Solar Manufacturing Surges, Legislation Threat Looms Large

US Solar Manufacturing Surges, Legislation Threat Looms Large

The United States added 8.6 gigawatts (GW) of new solar module manufacturing capacity in the first quarter of 2025, making it one of the strongest quarters for US solar manufacturing growth, according to new data released by the Solar Energy Industries Association (SEIA) and Wood Mackenzie.

The surge was driven by eight new or expanded factories across Texas, Ohio, and Arizona, while domestic solar cell production doubled to 2 GW with a new facility in South Carolina. Overall, the US solar industry installed 10.8 GW of new electricity-generating capacity in Q1, accounting for 82% of all new generation added to the grid.

Changes In Federal Rax Incentives 

Despite the growth, SEIA warned that new tariffs and proposed changes to federal tax incentives passed by the US House of Representatives could significantly undercut the industry’s momentum.

“Solar and storage continue to dominate America’s energy economy, adding more capacity than any other source using increasingly American-made equipment,” said Abigail Ross Hopper, SEIA president and CEO. “But our success is at risk. If Congress fails to fix the legislation passed by the House, it will trigger a dangerous energy shortage, halt our manufacturing boom, and raise electricity bills.”

Broader Tax Reconciliation Package

The House-passed bill, part of a broader tax reconciliation package, would revise or potentially repeal energy tax incentives that underpin much of the industry’s recent expansion. SEIA projects that without these incentives, 330,000 jobs could be lost, 331 factories could shut down or remain unopened, and $286 billion in investment could be wiped out. The association also warned of $51 billion in additional electricity costs for consumers nationwide.

Wood Mackenzie analyst Zoë Gaston said the 10.8 GW of solar installed in Q1 signals the growing dominance of solar in the US energy mix. “However, our analysis suggests that the U\S solar market has not yet reached its full potential,” she said. “The proposed changes to federal tax incentives, along with ongoing tariff concerns, could significantly impact this growth trajectory and potentially lead to energy supply challenges.”

Decline In Market Segments

SEIA and Wood Mackenzie’s latest outlook incorporates tariffs levied in Q2 but does not account for the full impact of the proposed rollback in tax credits. Their forecast shows a decline across most market segments over the next five years, including a 14% reduction in residential solar deployment and a 6% drop in utility-scale installations compared to previous estimates. Community solar projections remained flat.

The tariff landscape also remains volatile. New anti-dumping and countervailing duties (AD/CVD) on cells and modules from Southeast Asia, combined with broader tariff uncertainty, continue to weigh on deployment and investment decisions.

Texas led all states in new solar installations in Q1, followed by Florida, which overtook California for the number two position. Eight of the ten top solar states in Q1 – including Texas, Ohio, and Wisconsin – voted for President Donald Trump in the 2024 election.

“If Congress does not act, it’s jobs, factories, and investments in Trump country that will be hit the hardest,” SEIA said in a statement.