The U.S. solar industry, once a pillar of clean energy growth, is entering a period of heightened uncertainty as federal policy tilts in favor of fossil fuels under President Donald Trump’s second term.
A joint report by the Solar Energy Industries Association (SEIA) and Wood Mackenzie highlights a worrying trajectory: new solar installations could decline more than 10 percent by 2030 from 2025 levels, threatening jobs, investment, and energy security.
“Our success is at risk,” said SEIA President Abigail Ross Hopper. “If Congress fails to fix the legislation… lawmakers will trigger a dangerous energy shortage and stop America’s manufacturing boom in its tracks.”
Key Issues Impacting the Solar Sector:
Federal Policy Realignment Toward Fossil Fuels
Trump’s administration is signaling strong support for oil, gas, and coal industries — while key clean energy provisions introduced under the Inflation Reduction Act (IRA) face repeal or drastic cuts. Proposed legislation backed by the House threatens to eliminate tax credits that have driven solar growth, particularly in manufacturing and utility-scale deployment.
Tariffs Raising Costs
New and expanded tariffs on imported steel, aluminum, and solar components are driving up the cost of projects across the supply chain. These price hikes are especially burdensome for utility-scale developers, undermining the cost competitiveness of solar energy and stalling projects in the pipeline.
Threats to the IRA
The 2022 Inflation Reduction Act catalyzed a solar manufacturing boom across states like Texas, Ohio, and South Carolina. But President Trump has vowed to dismantle the IRA’s green energy incentives. If Congress follows through, SEIA warns the U.S. could lose over 330,000 jobs, see 331 factories closed, and forfeit $286 billion in local investments.
Residential Market Under Pressure
Home solar installations are falling, with a 13 percent year-over-year drop in Q1 2025. High interest rates, upfront costs, and less favorable net metering policies in several states are deterring adoption. Despite this, rising electricity bills may drive a rebound in residential demand later in the decade.
Tariff and Trade Instability
The imposition of anti-dumping and countervailing duties (AD/CVD) on Southeast Asian imports—a major source of U.S. solar components — adds to supply chain instability. Combined with domestic tariffs, these measures threaten to curtail access to affordable materials, slow deployment, and hurt American manufacturers relying on global inputs.
Geographic Imbalance and Political Irony
Growth remains concentrated, with Texas, Florida, Ohio, Indiana, and California accounting for 65 percent of new capacity in Q1. Ironically, many of these high-growth states — eight of the top ten solar states — voted for Trump in 2024. Should federal tax credits be rolled back, these “Trump country” regions stand to suffer the most from lost jobs and shuttered factories.
Manufacturing Boom with a Clouded Outlook
The U.S. added 8.6 GW of solar manufacturing capacity in Q1 2025 — one of the largest increases on record. Yet, this momentum is fragile. Analysts warn that the combination of tariff hikes and IRA rollback efforts could lead to a decline from 48.6 GW in 2025 to 43.5 GW by 2030, stunting the industry’s full potential.
Risk of Energy Shortages and Inflation
If Congress enacts the House-passed reconciliation bill as is, analysts predict a 173 TWh drop in energy production — enough to trigger national energy shortages. This could fuel a $51 billion spike in electricity costs and damage America’s ability to compete with China in the energy-intensive AI and data center sectors.
The U.S. solar industry, once hailed as a driver of economic growth and energy independence, faces a pivotal moment. Without sustained federal support and clear long-term incentives, the sector could falter just as global demand for clean energy surges. As the Trump administration reorients energy policy toward fossil fuels, industry leaders are warning that short-term political decisions may undermine America’s long-term energy future.
Baburajan Kizhakedath