U.S. Solar Industry Faces Challenges, Sees Opportunities in Utility-Scale Growth and Innovative Financing
The U.S. solar industry is experiencing significant shifts, with both challenges and opportunities on the horizon. Despite near-term headwinds, the outlook for utility-scale solar remains positive, with steady growth expected through 2030. Meanwhile, new financing structures are emerging in the residential market, and module pricing is on the rise. However, the Auxin case could create liquidity stress, and compliance with Foreign Entity of Concern provisions is becoming crucial for project eligibility.
The U.S. utility-scale solar sector is projected to see positive year-over-year growth throughout the next decade. However, the outlook for solar powering AI and data centers has moderated due to regulatory hurdles and uncertainty around the Inflation Reduction Act. Despite these challenges, the U.S. solar and storage sector retains strong growth potential, with utility-scale activity expected to expand through the end of the decade.
In the residential market, innovative financing structures are emerging. Prepaid lease programs are gaining traction, offering homeowners new options to go solar. Meanwhile, module pricing for domestic content and non-FEOC compliant panels has risen significantly and may continue to increase into 2026.
The Auxin case could have significant implications for the solar industry. Legal developments may require cash deposits or bonds totaling up to $50 billion, potentially straining liquidity across the solar supply chain. Companies most affected by the FEOC provisions are those subject to U.S. Treasury sanctions or heightened foreign entity scrutiny. They are implementing compliance measures to meet the standards set by the U.S. Treasury and IRS.
Solar-plus-storage continues to offer the most competitive economics across the grid. The ability to deliver speed, certainty, and scale will determine leading companies in the next phase of deployment. Despite a more cautious approach to near-term demand, U.S. distributors are expected to slow purchases of inverters and other equipment later this month and into October. Solar is expected to remain a key contributor, particularly when paired with storage, due to its lowest levelized cost of energy even on an unsubsidized basis.
In conclusion, while the U.S. solar industry faces challenges such as rising module pricing and potential liquidity stress from the Auxin case, it also presents opportunities with positive growth expected for utility-scale solar and innovative financing structures in the residential market. Solar-plus-storage remains the most competitive option, and the industry is adapting to comply with FEOC provisions. Despite near-term headwinds, the U.S. solar and storage sector retains strong growth potential.
