US residential solar capacity may decline 46% by 2030 due to tax credit repeal: Wood Mackenzie
One Big Beautiful Bill Act
(OBBBA), which phases out the Section 25D customer-owned
investment tax credit
(ITC) for residential solar systems after 2025, could reduce US residential solar capacity by up to 46% through 2030, according to a new report from
Wood Mackenzie
.
The report titled 'Near-term challenges but long-term potential: evaluating the US residential solar addressable market' evaluates the projected impact of OBBBA, noting significant near-term headwinds for the sector. The removal of the residential ITC is expected to make solar systems less affordable for homeowners, causing substantial market disruption.
'Many companies will not be able to stay in business,' said
Zoe Gaston
, Principal at Wood Mackenzie. 'However, the market will eventually adapt, and the remaining players will diversify and find ways to cut costs. Further, rising retail rates will continue to make the residential solar value proposition more compelling.'
Despite the anticipated downturn in the near term, the report highlights strong long-term growth potential. The total addressable market (TAM) for residential solar in the US is expected to reach nearly 1,500 GW by 2050.
Using data from the US Census Bureau and internal projections, Wood Mackenzie estimates that approximately 92 million single-family owner-occupied homes will exist by 2050. After excluding unsuitable properties and homes with existing solar systems, more than 70 million homes remain viable for solar installations over the next 25 years.
In a conservative 25-year low-case scenario, assuming only 12% TAM penetration, the market would still add 150 GW of new residential solar capacity by 2050.
'However, a lot can change in 25 years, including technological and product advancements, business model evolution, and cost declines that can accelerate residential solar growth,' said Gaston. 'We expect a more positive outcome than our low-case scenario.'
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