Residential solar in the US is actively cratering after President Trump’s One Big Beautiful Bill resulted in the sunsetting of a key tax credit for homeowners last year – which will result in a prolonged slump in installations, according to Bloomberg New Energy Finance (BNEF).
“The market is not expected to recover to the record levels of 2023 anytime in the next decade,” according to the report.
The downturn is widespread – with installers nationwide reporting steep drops in new rooftop projects. Higher interest rates, the winding down of certain federal incentives, and shifting state policies are cited as primary drivers behind the slowdown. Many homeowners are now facing longer payback periods and higher upfront costs, making the economics less attractive than in previous years.
Two notable exceptions stand out amid the broader decline. California and Florida continue to see relatively stronger demand, supported by state-level incentives, high electricity prices, and established installer networks. Even in these states, however, growth has moderated compared with the boom years, and analysts expect the national picture to remain challenged for the foreseeable future.
Impact on Major Players and Supply Chain
Companies such as Sunrun, Enphase Energy, and SunPower have already felt the effects through softer order books and margin pressure. The residential segment, once a bright spot in the clean energy transition, is now forcing these firms to adjust forecasts and focus more on commercial and utility-scale projects where demand remains steadier.
The stall comes at a time when broader energy policy debates are intensifying. With changing federal priorities and questions around long-term subsidy structures, the residential solar sector is confronting the reality that rapid adoption was heavily dependent on favorable financing and generous tax credits that are now fading.
This development underscores the challenges of scaling residential renewables without sustained policy tailwinds. While utility-scale solar and battery storage continue to expand in many regions, the rooftop market’s slowdown highlights how sensitive consumer adoption remains to interest rates, payback periods, and regulatory certainty. BloombergNEF’s outlook suggests the industry may need several years to stabilize before any meaningful recovery takes hold.
That said, Californa and Florida are bucking the trend…
California, a longtime solar leader, and Florida, which passed a new pro-solar law last year. BloombergNEF projects Florida’s residential solar additions will hit 710 megawatts in 2026, a 62% increase over last year. California’s installations are also forecast to grow 17% in 2026. Both states are also leading on solar permit applications. -Bloomberg
The national crunch is also affecting the market for solar batteries – from which only about 1.4 gigawatts of home storage is expected to go online this year, down 26% from 2025. That said, some 40% of new residential solar systems in the first three months of 2026 had batteries, BloombergNEF found, up from an average 35% last year.
“Battery storage is the future of home solar,” said BloombergNEF analyst, Cosmo van Steenis. “Batteries can lay up stores of solar power in the daytime and release them at night.”