Wood Mackenzie Says U.S. Solar Installations Fell 14% Last Year

Trump-era OBBBA legislation seen slowing project timelines and dampening near-term growth

New solar installations in the U.S. declined sharply last year, reflecting the impact of policy changes under the Trump administration that accelerated the phaseout of solar tax credits.

According to the “U.S. Solar Market Insight Annual Review,” published in March 2026 by Wood Mackenzie and the Solar Energy Industries Association (SEIA), new solar capacity additions totaled 43.2 gigawatts (GW) in 2025, down 14% from a year earlier.

Utility-scale solar installations were particularly affected, falling 16% year over year to 34.7 GW in 2025. Installations in the fourth quarter dropped 40% compared with the same period a year earlier. The report said developers that had rushed to connect projects to the grid by year-end delayed commercial operation timelines into 2026–2028 after changes to tax credit schedules reduced urgency.

President Donald Trump signed the “One Big Beautiful Bill Act” (OBBBA) on July 4 last year, advancing the expiration timeline for solar tax credits. Under the law, projects must either begin construction before July 4, 2026, or enter operation by Dec. 31, 2027, to qualify for the credits.

The report also cited uncertainty surrounding Foreign Entity of Concern (FEOC) rules as a factor weighing on the market. While guidelines have been issued, it remains unclear what level of foreign involvement would disqualify projects from tax credits. Wood Mackenzie said that uncertainties related to FEOC interpretations, safe harbor provisions, tariffs, permitting and data center demand could reduce cumulative installations by about 100 GW through 2036 compared with earlier forecasts.

Wood Mackenzie expects both commercial and residential solar segments to contract this year. Commercial installations rose 6% in 2025 to 2,345 megawatts (MW), but are projected to decline 13% in 2026 as volumes tied to the previous net energy metering (NEM 2.0) incentive framework are exhausted following policy changes. Residential installations are also expected to shrink 19% this year from 4,647 MW recorded in 2025.

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