Solar Slump: Installations Fall 14% after Trump-era Subsidy Pullback

With input from the Hill, the New York Times, and Reuters.

US solar installations slipped last year as policy shifts and trade noise cooled a market that had been charging ahead. A new joint report from the Solar Energy Industries Association (SEIA) and Wood Mackenzie shows capacity additions fell about 14% in 2025 — down to 43.2 GWdc from just over 49 GWdc the year before.

That decline didn’t come out of nowhere. Since President Donald Trump returned to office, his administration has pushed fossil-fuel exports and signed into law the One Big Beautiful Bill Act, which sped up the rollback of subsidies and tax breaks that had turbocharged wind and solar after the earlier climate bills. The SEIA/Wood Mackenzie report calls that change a “significant policy shift” that undercut the incentive structure investors and developers had been counting on.

Still, context matters. Solar still supplied more than half of all new generating capacity added to the US grid in 2025, and the market’s tailwinds aren’t gone — just altered. The US Energy Information Administration expects solar to again account for more than half of new capacity this year, with over half of that growth planned in four states: Texas, Arizona, California and Michigan.

The report pins the pullback on a mix of politics and policy. The accelerated phase-out of tax incentives removed a predictable stream of support for projects already in the pipeline, forcing some developers to pause or delay builds while they repriced deals or sought other financing. Tariff moves also rattled the sector: solar supply chains are sensitive to import costs, and last year’s new levies raised uncertainty — even though the Supreme Court recently limited part of the president’s authority to impose some of those trade measures.

At the same time, rising costs for new gas plants and continued strong demand for clean power kept solar competitive on economics alone, the report notes. Solar outpaced both wind and natural gas for new capacity last year; together, wind and gas made up less than a quarter of new additions in 2025.

Developers and installers are juggling the sudden policy reset. Some projects have been delayed or reworked to bridge gaps left by the subsidy phase-outs, and financiers are demanding firmer pricing and contracts. Yet many players are still bullish on long-term demand: grid-scale storage, rising corporate clean-energy buying, and state-level goals continue to create opportunities even without the same federal tailwinds.

The SEIA/Wood Mackenzie analysis is blunt about that reality:

“It’s clear that solar will continue to be the dominant source of new power capacity in the United States, even as gas generation (from both new and existing sources) continues to grow,” the report says. The group argues that strong demand growth and the escalating cost of gas plants should allow solar to remain cost-competitive “even without tax credits.”

Short-term losers are obvious: smaller installers and community projects that relied heavily on federal tax incentives are feeling the squeeze, and some supply-chain contractors are seeing slower order books. Utilities and large developers that locked in long-term contracts or that can tap capital markets more easily are better positioned to weather the change.

On the policy front, states that have already moved aggressively on renewables — think California and Texas — will likely keep attracting projects, while states that were counting on federal levers to boost buildouts may see slower growth. The report also suggests the industry will be watching trade policy closely: even modest import taxes can reshape project math, and the unexpected nature of last year’s moves added extra risk for planners.

Last year’s 14% drop in installations is a meaningful cooldown, but not a market collapse. Solar still accounted for the lion’s share of new capacity, and the longer-term economics of panels and batteries mean the industry still has a runway — just a bumpier one. The policy pendulum has swung; whether it swings back or stays put will determine how fast the US solar boom resumes.