The US Rooftop Solar Market Just Hit a Wall – Here's What Comes Next

Residential rooftop solar installations in the US are on track to fall to their lowest level since 2020 in 2026. The culprit: President Trump's One Big Beautiful Bill Act, which eliminated the 30% federal tax credit for rooftop solar and battery backup systems. This is not a temporary blip. BloombergNEF analysts project it will take more than a decade for the industry to match the installation record set in 2023. The immediate question for executives: Who gains, who loses, and where should capital flow?

Why the Crash Is Worse Than It Looks

The US residential solar market was already under pressure from high interest rates, tariffs, and California's net metering policy shift in 2023. The removal of the federal tax credit was the knockout punch. With average installation costs at $2.58 per watt – more than double Australia's $1 per watt – the value proposition for homeowners has eroded significantly. The payback period has lengthened, and demand has cratered. But beneath the headline numbers, structural shifts are creating new opportunities.

Winners: State-Level Resilience and DIY Solar

Not all markets are declining. California, the largest rooftop solar state, is projected to grow 17% in 2026. Florida, the second-largest, is set to surge 62%. These states benefit from high electricity rates, ample sunshine, and strong consumer awareness. For installers and manufacturers focused on these markets, the outlook is far brighter. Meanwhile, a new segment is emerging: balcony solar. Several states have passed legislation legalizing DIY plug-in solar systems. These low-cost, accessible units open the market to renters and lower-income households – a demographic previously locked out. Manufacturers of plug-in systems are poised for rapid growth.

Losers: Traditional Installers and Battery Storage

The biggest losers are residential solar installers in states without strong state-level incentives. With federal support gone, many will face revenue declines and potential consolidation. Battery storage manufacturers are also hit hard: the elimination of the 30% tax credit for battery backup reduces the economic case for pairing storage with solar. This could slow the adoption of home energy storage, a key component of grid resilience and electrification.

Second-Order Effects: Policy and Investment Shifts

The federal policy reversal accelerates a trend toward state-led clean energy policy. States like California and Florida are effectively creating their own solar markets, while others lag. This fragmentation creates complexity for national players but opportunities for regional specialists. Additionally, the rise of balcony solar signals a shift toward smaller, decentralized energy solutions. This could disrupt traditional business models and open new revenue streams for companies that adapt quickly.

Market Impact: A Decade-Long Recovery

BNEF's projection of a decade-long recovery to 2023 levels underscores the severity of the policy shock. The US solar industry must now compete globally with higher costs and less federal support. This may spur innovation in cost reduction – such as new installation techniques or supply chain localization – but in the near term, the market will contract. Investors should watch for consolidation among installers and a pivot toward commercial and utility-scale solar, which still benefit from other incentives.

Executive Action: What to Do Now

  • Pivot to state-level markets: Focus sales and marketing efforts on California, Florida, and other states with strong solar policies. These markets offer growth despite federal headwinds.
  • Invest in DIY solar: The balcony solar segment is nascent but growing fast. Companies that develop or distribute plug-in systems can capture a new customer base.
  • Rethink battery storage strategy: With the federal credit gone, residential storage may need to be bundled with other value propositions, such as backup power or grid services.


Source: Canary Media

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Intelligence FAQ

The Trump administration eliminated the 30% federal tax credit for rooftop solar and battery backup, making installations significantly more expensive. Combined with high interest rates and tariffs, demand has plummeted to 2020 levels.

California (17% growth in 2026) and Florida (62% growth) are surging due to high electricity rates, strong state-level policies, and consumer awareness. These markets are resilient.

Balcony solar refers to DIY plug-in solar systems that are cheap and accessible to renters. Several states have legalized them, creating a new market segment that could offset some of the rooftop decline.

BloombergNEF analysts estimate it will take more than a decade to match the installation record set in 2023, indicating a prolonged downturn.

Residential solar installers in states without strong incentives, and battery storage manufacturers, as the tax credit for storage was also eliminated.