US solar’s foundation holds strong, even as the ground keeps shifting

The US solar industry installed 11.4 gigawatts direct current (GWdc) of capacity in Q2 2026, a 45% increase from Q2 2025 and a 43% increase from Q1 2026. After a seasonally weak first quarter, national installations rebounded sharply. Utility-scale installations drove growth in the second quarter, reflecting increased build-out ahead of tax credit deadlines. The residential solar segment, by contrast, struggled to maintain momentum as the market adjusts to the 2025 expiration of the 25D residential tax credit.  

Despite growth, uncertainty remains elevated across the market. Permitting delays now affect an estimated 30% of the early-stage utility-scale pipeline, new trade actions are reshaping supply chains and developers are navigating the quickly approaching post-ITC transition. 

In Wood Mackenzie’s US Solar Market Insight Q3 2026 report, created in collaboration with the Solar Energy Industries Association (SEIA), we explore what drove the Q2 2026 rebound, the trade actions reshaping the manufacturing landscape and the US solar outlook through 2031. Read on for some key highlights or fill in the form on this page for a complimentary copy of the 15-page executive summary.  

The race to place safe-harbored projects in service drove a surge in utility-scale installations  

The utility-scale segment installed nearly 10 GWdc of new capacity in Q2 2026, a 61% increase year-over-year, as developers rush to energize safe-harbored projects ahead of the Section 48E/45Y tax credit deadlines. The July 4, 2026 begin-construction deadline has now passed. Developers that missed the deadline now face the December 31, 2027 placed-in-service cliff or lose tax credit eligibility. The size of the safe-harbored project pipeline, which Wood Mackenzie estimates totals over 200 GWdc, continues to underpin the near-term outlook.  

Contracting activity remained resilient in the utility-scale segment, concentrated in a handful of markets including Utah and Texas. Data and technology companies continue to account for the majority of new offtake agreements, highlighting the growing role that data center demand will play in utility-scale solar development. 

Distributed solar growth softens as the residential segment enters the early days of a post-tax credit market  

The distributed solar segments softened further in Q2 2026 as market conditions became more challenging. New residential solar installations totaled just 995 MWdc, the segment’s lowest quarterly total in five years. Following the Section 25D tax credit expiration, installers are working through the operational challenges of shifting from cash and loans sales to third-party ownership. We now expect a 23% year-over-year contraction in 2026, slightly steeper than last quarter’s estimate, before growth resumes in 2027.  

The non-residential distributed solar segments benefit from strong project pipelines and continued tax credit eligibility, but state-level policy changes and interconnection timelines are limiting growth. Commercial solar installations increased 11% year-over-year in Q2 2026, driven by continued NEM 2.0 buildout in California. Community solar installations declined 14% year-over-year as a steep decline in New York volumes offset growth in key states including Illinois, New Jersey, Virginia and Delaware. 

New trade actions are reshaping the economics of US solar manufacturing 

The US solar industry is now facing the most consequential trade environment of the past several years. On August 6, 2026, the administration signed a proclamation imposing a 15% tariff plus minimum import prices on key solar components, effective December 4, 2026. This new structure widens the advantage for fully integrated domestic suppliers and raises the financing bar for cell and wafer capacity.  

Separately, on July 28, 2026, the FCC added foreign-produced power inverters to its Covered List, barring new authorizations for unapproved models. Additionally, on August 26, 2026, the White House issued an Executive Order restricting imports of power generation equipment from Covered Foreign Entities, including China. The final impact of these actions remains uncertain, pending outstanding guidance; however, further restrictions on foreign products may catalyse new domestic utility-scale solar and storage manufacturing.  

In our base case, solar additions stabilise at around 44 GWdc annually through 2031 

The US solar market will roughly double over the next five years, reaching over 545 GWdc of cumulative capacity by 2031. Despite a sharp increase in Q2 installations, our outlook through 2031 has changed minimally since last quarter, with changes concentrated in the utility-scale segment. Annual installations will remain essentially flat, hovering around 44 GWdc on average. This stability reflects resiliency amidst structural market constraints. Permitting bottlenecks, interconnection delays and an evolving trade policy landscape are all limiting how quickly strong solar demand and a robust safe-harbored pipeline can translate into installed capacity. The post-2030 outlook is even more uncertain. Solar developers have flagged how challenging project economics will become without the ITC, and Wood Mackenzie is monitoring several factors that will determine how the market navigates the transition.  

The full executive summary goes beyond the headlines. Inside, you’ll find state-by-state installation rankings across all 50 states plus Washington DC and Puerto Rico, national system pricing data and our complete forecast through 2031 across residential, commercial, community and utility-scale solar segments. Fill out the form at the top of the page to download your complimentary copy.