US Residential Solar Hits Subsidy Cliff: BNEF Forecasts Prolonged Stall Through 2030s Amid Policy Shifts and Rising Costs

A BloombergNEF analysis released in mid-June 2026 projects US residential solar installations will fall to 4.1 gigawatts in 2026, a 15% drop from 2025 and the lowest level in five years, with no return to 2023 peaks expected this decade. The primary driver is the expiration of the 30% federal Residential Clean Energy Tax Credit (Section 25D) on December 31, 2025, enacted via the One Big Beautiful Bill signed by President Trump in July 2025. This subsidy cliff has lengthened payback periods and raised effective upfront costs for homeowners amid elevated interest rates.

Installers report sharp declines in new rooftop projects nationwide. Major players are adjusting: Sunrun anticipates a 25% reduction in US residential additions, Enphase Energy 22%, SolarEdge 20%, and SunPower 15%, according to company filings and the BNEF report. The downturn extends to home battery storage, with only 1.4 GW expected online in 2026—a 26% decline—though battery pairing rates on new solar systems rose to 40% in Q1 2026 from 35% the prior year.

California and Florida remain relative bright spots due to state incentives, high retail electricity rates, and mature supply chains, with BNEF forecasting 17% and 62% growth respectively in those states for 2026. Nationally, however, the residential segment faces compounding pressures including market saturation in high-adoption areas, grid interconnection delays, and shifting state net-metering policies.

This residential contraction contrasts with steadier utility-scale solar growth in some regions but aligns with broader BNEF and industry data showing US solar installations overall cooling after 2024-2025 peaks, influenced by the same federal policy changes. Analysts note that rapid prior adoption relied heavily on federal backstops now removed, exposing sensitivities to financing costs and regulatory certainty.