US solar installations surge as federal tax credits begin phasing out

Overview

Updated Sep 12

The US added 11.4 gigawatts of solar capacity in the second quarter of 2026 — a 45% jump from a year ago and the market's strongest quarter in years. Nearly all of it was utility-scale: developers rushed to start construction on large solar farms before a July 4 deadline stripped federal tax credit eligibility.

That deadline was the safe harbour cutoff written into the One Big Beautiful Bill Act, which phases out the investment and production tax credits that made US solar economics work. Wood Mackenzie estimates more than 200 gigawatts of projects were grandfathered in; the US now runs about 300 gigawatts of solar, enough for roughly 50 million homes. The same law ends the subsidy era — residential installations are at a five-year low, and new tariffs on solar components take effect in December.

Why it matters

The last big federally subsidized solar rush has passed. Whether US clean power can keep growing without tax credits now gets tested.

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Key Indicators

11.4 GW

Q2 2026 solar installations

Up 45% year over year and 43% from Q1, per SEIA/Wood Mackenzie.

45%

Year-over-year growth in Q2 2026

The sharpest quarterly gain in recent years, driven by the safe harbour deadline.

61%

Utility-scale year-over-year growth

Utility-scale projects delivered 9.6 GW of the 11.4 GW quarterly total.

>200 GWdc

Safe harbored project pipeline

Wood Mackenzie estimate of capacity grandfathered before the July 4 deadline.

~300 GW

Operating US solar capacity

Enough to power about 50 million homes, roughly one-third of US households.

Voices

Curated perspectives — historical figures and your fellow readers.

People Involved

Caitlin Connelly

Senior analyst, Wood Mackenzie

Co-author of the Q2 2026 Solar Market Insight report

Organizations Involved

Solar Energy Industries Association (SEIA)

Trade association

Co-publisher of the Solar Market Insight report

US trade association for the solar industry, tracking installations and market data quarterly.

Wood Mackenzie

Energy research and consulting firm

Co-author of the Solar Market Insight report

Global energy analysis firm that models US solar capacity forecasts and safe harbour pipelines.

U.S. Department of the Treasury

Federal agency

Issued guidance on Prohibited Foreign Entity provisions

Federal agency that, with the IRS, released partial safe harbour guidance in February 2026.

Timeline

February 2026 September 2026

5 events Latest: September 12th, 2026 · 2 months ago

Tap a bar to jump to that date

September 2026
SEIA report shows record Q2 surge
Latest Report

Report shows 11.4 GW US solar added in Q2, up 45% year over year.
September 12th, 2026
August 2026
New solar tariffs announced
Policy

Trump signs proclamation imposing a 15% tariff plus minimum import prices on key solar components, effective December 4.
August 6th, 2026
July 2026
Safe harbour deadline passes
Policy

Projects not under construction by this date lose investment and production tax credit eligibility.
July 4th, 2026
April 2026
Q2 begins; utility-scale builds accelerate
Market

Developers ramp construction on utility-scale projects ahead of the July 4 safe harbour deadline.
April 1st, 2026
February 2026
Treasury releases safe harbour guidance
Regulatory

Treasury and IRS issue partial guidance on Prohibited Foreign Entity rules, giving projects essential but incomplete clarity on tax credit eligibility.
February 2026

Scenarios

Utility-scale solar holds strong through the 2027 placed-in-service cliff

Likely Resolves by Q1 2028

Discussed by: Wood Mackenzie, SEIA

Wood Mackenzie forecasts roughly 44 GWdc in annual additions through 2031, underpinned by the 200+ GWdc safe harbored pipeline. The risk is the December 31, 2027 deadline: projects that don't reach commercial operation by then lose credit eligibility. Permitting delays already affect an estimated 30% of the early-stage utility-scale pipeline.

Tariffs and trade restrictions trigger a supply chain shakeout

Possible Resolves by Q2 2027

Discussed by: Wood Mackenzie, PV Tech, industry analysts

The 15% tariff plus minimum import prices on solar components takes effect December 4, 2026. Add to that FCC restrictions on foreign-made inverters and an executive order barring imports from Covered Foreign Entities. Wood Mackenzie says this widens the advantage for fully integrated domestic suppliers but raises financing costs for new cell and wafer capacity.

Residential solar returns to growth in 2027

Possible Resolves by End of 2027

Discussed by: Wood Mackenzie

Residential installations hit a five-year low of 995 MW in Q2 2026 after the Section 25D tax credit expired at the end of 2025. Installers are shifting from cash and loan sales to third-party ownership. Wood Mackenzie expects a 23% contraction in 2026, then growth resumes in 2027 as that transition completes.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

2012–2016

Wind PTC deadline rushes (2012–2016)

US wind developers repeatedly rushed projects to completion before production tax credit expiration dates, creating boom-bust cycles. Each deadline brought a surge of new capacity, followed by a sharp dip the next year.

Then

Installations spiked ahead of deadlines, then collapsed, hurting supply chains and financing.

Now

The five-year extension in 2015 broke the cycle, letting wind become cost-competitive with natural gas.

Why this matters now

Solar now faces the same deadline-driven dynamics — but without a long-term extension. The ITC and PTC phase out entirely rather than being extended.

2022–2023

California NEM 3.0 transition (2023)

California cut rooftop solar export rates by roughly 75% under its Net Energy Metering 3.0 rules. Thousands of homeowners rushed to install systems before the April 2023 cutoff.

Then

Residential installs spiked in early 2023, then fell sharply for about a year.

Now

The market stabilized around third-party ownership and battery pairing as installers adapted.

Why this matters now

It shows the predictable arc of a policy deadline: a front-loaded rush, then a contraction, then a rebalance. Residential solar is now in the contraction phase after the 25D credit expired.

2019–2021

Solar ITC step-down (2020–2021)

The federal investment tax credit stepped down from 30% to 26% at the start of 2020. Developers rushed to qualify projects before each step-down, spiking installations.

Then

A record 2020 for utility-scale solar, followed by a softer 2021.

Now

Solar kept growing as panel costs fell far enough to make the credit less central to project economics.

Why this matters now

It shows the credit's diminishing importance over time — but this phaseout is steeper, ending the credits entirely rather than reducing them.