Tax credit changes impact US solar manufacturing momentum

US Solar Manufacturing Rides High in 2025 Amidst Policy Uncertainty

The US solar manufacturing and supply chain saw major strides in 2025, with the entire solar supply chain now within the country’s production capability. Yet, the road ahead may be rocky due to ambiguous market conditions in 2026.

As per the Solar Energy Industries Association, the US registered impressive growth across various categories in 2025. A significant 300% increase in solar cells production and a 37% boost in solar module production were noteworthy, pushing capacity beyond 60 gigawatts between the end of 2024 and late 2025.

Despite the growth, experts suggest that the industry may still fall short of meeting domestic market demand. The approaching sunset of tax credits, increased eligibility thresholds, and tariffs could complicate business decisions.

Challenges Looming Over Solar Industry

Scott Moskowitz, VP of Market Strategy and Public Affairs at Qcells, sheds light on the industry’s progress. He highlights the significant growth and investment, particularly for module and cell manufacturing, spurred by tax credits. However, he emphasizes that the sector still has a long journey ahead in reshoring.

Political uncertainties, especially those associated with President Donald Trump’s One Big Beautiful Bill Act (OBBBA), pose a potential hurdle. OBBBA could dampen the industry’s momentum by accelerating the phase-out of the Investment Tax Credit for solar projects initiated after 2027 and augmenting content requirements for the Domestic Content Bonus.

However, Trump’s tariffs could offer a level of market protection, potentially safeguarding companies from international competition. These conflicting political decisions may inadvertently harm the solar industry, experts warn.

Strategic Moves Towards Reshoring

Until recent times, the US solar manufacturing sector enjoyed bipartisan support, bolstered by trade policy and tax credits. Trump’s administration introduced the first of such supportive conditions via the Section 201 safeguard in 2018, allowing the US to impose temporary tariffs on a wide range of products in case of import surges.

This led Qcells to invest in the US, opening a $200 million solar panel manufacturing facility in Dalton, Georgia – the largest of its kind in the Western Hemisphere.

President Joe Biden’s Inflation Reduction Act further bolstered the sector by establishing the Section 45X tax credit and expanding and extending the ITC, offering a 30% credit for solar projects through 2032.

Policy Instability Threatens Manufacturing Growth

However, the swift phase-out of the ITC and modification of 45X under OBBBA could impede efforts to enhance production capabilities. Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition, suggests that the unexpected phase-out reintroduced uncertainty into the equation.

In the aftermath of the COVID-19 pandemic, manufacturers are keen to localize their production networks. However, the instability of policy support around the industry complicates the reshoring process in the US solar manufacturing industry. Carr emphasizes that the demand for solar-powered electricity is inevitable, but its production in the US is not a certainty.