Utility-scale projects drove the Q2 rebound for the US solar market as developers rushed to meet the July 4 deadline to secure safe harbor
Residential solar fell to its lowest quarterly level in five years; it is forecast to decline 23% this year before returning to growth in 2027
Developers safe-harbored an estimated 216 GW to 240 GW DC of projects, underpinning near-term demand, but challenges persist
The US solar market posted a sharp rebound in Q2 2026, with quarterly installations up 45% year-on-year (YoY) and 43% quarter-on-quarter (QoQ) to 11.4 GW DC. The utility-scale segment drove deployments spurred by the safe harbor deadline of July 4, 2026.
According to the US Solar Market Insight Q3 2026 report from the Solar Energy Industries Association (SEIA) and Wood Mackenzie, there was a 61% YoY jump in utility-scale installations during the quarter. The 9.6 GW DC of new installations in this segment reflected the rush to energize projects to meet the deadline to secure tax credits under Section 48E/45Y.
While the deadline to retain safe harbor eligibility is now over, the report authors believe that the resulting pipeline will support the market in the near term. SEIA and Wood Mackenzie estimate that between 216 GW DC and 240 GW DC of projects entered the safe-harbored pipeline. Wood Mackenzie previously projected US developers would safe-harbor this capacity before July 4, 2026 (see US Developers May Safe-Harbor 240 GW DC Solar Modules).
According to Wood Mackenzie’s Senior Analyst, US Solar, Caitlin Connelly, developers that missed the July 4, 2026, deadline must now meet the December 31, 2027, placed-in-service timeline or lose tax credit eligibility. Connelly pegs the size of the safe-harbored project pipeline at over 200 GW DC, which underpins the near-term outlook for this market.
Solar and battery storage together accounted for 70% of all new electricity-generating capacity added in H1 2026, with solar alone accounting for 45%. “Solar and storage have grown to a scale most Americans have yet to fully realize and we simply can’t meet America’s growing energy needs without these technologies,” said SEIA CEO Tim Pawlenty.
For distributed solar, however, the picture was weaker as installations totaled 995 MW DC in Q2, down 12% YoY and 10% QoQ. According to the report, it was the segment's lowest quarterly installation level in five years.
The residential solar market is still adjusting to the end of the Section 25D residential tax credit in 2025, while installers face challenges moving from cash and loan sales to third-party ownership (TPO) models, the report highlights.
SEIA and Wood Mackenzie expect residential solar installations to contract 23% in 2026 before returning to growth in 2027.
Commercial solar was more resilient, with 638 MW DC installed in Q2, up 11% YoY, but community solar fell 14% to 231 MW DC.
Policy and Supply Chain Pressures The strong utility-scale quarter has not removed the broader challenges facing the industry, the analysts point out. They expect permitting issues to negatively affect about 30% of the early-stage solar pipeline. Interconnection delays and uncertainty around federal rules are also limiting the pace at which projects can move forward. Trade policy, they say, is adding another layer of uncertainty.
The administration announced a 15% tariff and minimum import prices (MIP) for key solar components, including polysilicon, wafers, cells, and modules. Issued following a national security review of imports under Section 232, these set the indicative MIPs at $21/kg for polysilicon, $100/kg for ingots, $100/kg for wafers, $0.22/W for cells, and $0.38/W for modules. The MIPs become effective December 4, 2026 (see US Announces 15% Tariff On Imported Polysilicon Under Section 232).
In July 2026, the Federal Communications Commission (FCC) added foreign-produced power inverters to its Covered List, while an August executive order restricts imports of bulk power-generation equipment from certain covered foreign entities. These measures are expected to affect the economics of the US solar supply chain, analysts say, while boosting domestic manufacturing.
Wood Mackenzie believes the new trade structure could strengthen fully integrated domestic suppliers while making cell and wafer manufacturing projects harder to finance.
By the end of the reporting quarter, the US had approximately 66 GW DC of domestic nameplate solar module manufacturing capacity, including around 1 GW DC of new capacity added during Q2.
However, SEIA’s September 2026 updated factsheet puts the country’s total operational module manufacturing capacity at 75.3 GW, with an additional 14.4 GW under construction. The operational solar cell manufacturing capacity stands at 10.6 GW, with another 19.1 GW under construction.
Despite the sharp Q2 increase, SEIA and Wood Mackenzie have made only a small change to their US solar outlook from 2026 to 2031. They raised the forecast by 1.2%, largely due to the utility-scale segment. Annual additions are expected to remain around 44 GW DC.
Wood Mackenzie expects cumulative solar capacity to exceed 545 GW DC by 2031. Post-2030 outlook remains more uncertain as developers assess project economics without the investment tax credit (ITC).
