US solar installations surge as federal tax credits begin phasing out
Built World11.4 GW added in Q2 2026, a 45% jump — utility-scale projects raced a July 4 safe harbour deadline
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Overview
Updated 4 hours agoThe 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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People Involved
Organizations Involved
US trade association for the solar industry, tracking installations and market data quarterly.
Global energy analysis firm that models US solar capacity forecasts and safe harbour pipelines.
Federal agency that, with the IRS, released partial safe harbour guidance in February 2026.
Timeline
February 2026 September 2026
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SEIA report shows record Q2 surge
Today ReportReport shows 11.4 GW US solar added in Q2, up 45% year over year.
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New solar tariffs announced
PolicyTrump signs proclamation imposing a 15% tariff plus minimum import prices on key solar components, effective December 4.
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Safe harbour deadline passes
PolicyProjects not under construction by this date lose investment and production tax credit eligibility.
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Q2 begins; utility-scale builds accelerate
MarketDevelopers ramp construction on utility-scale projects ahead of the July 4 safe harbour deadline.
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Treasury releases safe harbour guidance
RegulatoryTreasury and IRS issue partial guidance on Prohibited Foreign Entity rules, giving projects essential but incomplete clarity on tax credit eligibility.
Scenarios
Utility-scale solar holds strong through the 2027 placed-in-service cliff
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
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
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.
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.
Installations spiked ahead of deadlines, then collapsed, hurting supply chains and financing.
The five-year extension in 2015 broke the cycle, letting wind become cost-competitive with natural gas.
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.
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.
A record 2020 for utility-scale solar, followed by a softer 2021.
Solar kept growing as panel costs fell far enough to make the credit less central to project economics.
It shows the credit's diminishing importance over time — but this phaseout is steeper, ending the credits entirely rather than reducing them.
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.
Residential installs spiked in early 2023, then fell sharply for about a year.
The market stabilized around third-party ownership and battery pairing as installers adapted.
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.
