The US solar industry has a robust pipeline. So why is 2026 looking flat?

The US solar industry installed 7.8 gigawatts direct current (GWdc) of capacity in Q1 2026, a 27% decline from Q1 2025 and a 42% drop from Q4 2025. These numbers reflect typical first-quarter seasonality rather than a fundamental deterioration in the market. More telling is the broader picture: solar alone accounted for 60% of all new electricity-generating capacity added in the US in Q1 2026, and together with battery storage, the two technologies made up an extraordinary 91% of all new capacity additions. The solar industry remains the backbone of America’s power buildout. 

But many uncertainties now lie ahead. Trade policy, financing conditions, expiring tax credits, and permitting bottlenecks are converging to constrain what should be a period of rapid expansion. In our US Solar Market Insight Q2 2026 report, created in collaboration with the Solar Energy Industries Association (SEIA), we explore the forces shaping each segment of the solar market and our outlook through 2031. Read on for some key highlights or fill in the form for a complimentary copy of the executive summary.  

A large safe-harbored pipeline and strong contracting activity provide a firm foundation for near-term installations 

The most important factor underpinning our near-term outlook is the scale of the safe-harbored project pipeline. Wood Mackenzie estimates that between 216 and 240 GWdc of utility-scale solar capacity is safe harbored, most of which was safe harbored ahead of year-end 2025, before Foreign Entity of Concern (FEOC) requirements took effect under the One Big Beautiful Bill Act. Even accounting for typical attrition, this pipeline is sufficient to support strong utility-scale buildout through 2030. 

Contracting activity also remained robust in Q1 2026, with 6.3 GWdc of capacity signed - a 15% increase year-over-year - driven largely by Texas projects with offtake agreements led by data and technology companies. Project execution has been on schedule, with nearly all projects being completed on time. These are meaningful indicators of robust demand and the industry’s project execution capabilities. 

Trade actions and FEOC uncertainty are the most significant challenges for solar manufacturing 

The industry faces a more complicated trade environment than at any point in recent years. In spring 2026, the Department of Commerce announced high preliminary countervailing duty and anti-dumping tariff rates on solar cells and modules from India, Indonesia, and Laos. Together with Malaysia, Thailand, and Vietnam - already subject to tariffs - these nations supplied 78% of cell imports last year. Meanwhile, a Section 232 trade action on solar-grade polysilicon and derivative products is anticipated to be announced this summer, which could severely constrain manufacturing activity for some domestic producers. 

Module production has grown substantially, reaching approximately 70% of 2025 installations. However, the US still has only 3 GWdc of cell manufacturing capacity, leaving domestic module factories heavily dependent on imported cells. Several new cell facilities are in development, but uncertainty around FEOC requirements has stymied further investment decisions. Full regulatory guidance on FEOC provisions may not be published until next year, and with the July 4th safe-harbor deadline approaching, the industry must make critical decisions without complete clarity. 

In our base case, solar additions remain flat at around 43 GWdc annually through 2031 

Our base case outlook calls for average annual solar additions of approximately 43 GWdc between 2026 and 2031, resulting in a doubling of the US solar fleet over the next five years. While this cumulative capacity figure is substantial, it represents a period of stagnation in annual volumes - the previous doubling of the US solar industry took just three years. 

The distributed segments face a more challenging near-term. We expect the residential solar market to contract 21% in 2026, following the expiration of the Section 25D tax credit at year-end 2025. The commercial segment will also see a near-term dip, driven primarily by California’s transition away from NEM 2.0. Recovery in both segments is expected in 2027 for residential and 2028 for commercial, supported by third-party ownership models, rising retail electricity rates, and safe-harbored project pipelines. 

Our outlook for 2026 through 2031 has changed minimally from last quarter - an increase of just 1.4% in total expected capacity. This stability reflects a market with genuine structural constraints. Interconnection queues, permitting bottlenecks, the approaching end of federal tax incentives, and ongoing trade uncertainty are all limiting the pace at which strong demand signals can be translated into installed capacity. Addressing these limitations will be essential to meeting both decarbonization targets and rapidly growing US power demand. 

The full report explores each segment in detail and highlights the precise assumptions made in our forecasts. Fill in the form at the top of the page for a complimentary copy of the executive summary.