US Utility Solar Grows 10 Percent Despite Federal Subsidy Rollbacks

Aug 6, 2025 08:13 AM ET
  • Reuters analysis shows utility-scale solar capacity still climbed 10 % in H1 2025, led by Texas and Arizona, even after tax-credit cuts.

A Reuters review of federal data reveals that US utility-scale solar capacity expanded roughly 10 % in the first half of 2025, shrugging off the Biden administration’s mid-2024 rollback of accelerated tax credits.

Growth was far from uniform. Texas added 3.2 GW, a 14 % jump, buoyed by low interconnection fees and developer appetite for ERCOT’s merchant market. Sun-soaked Arizona followed with a 24 % surge, while California stalled at just 2 % as drought-driven hydropower curtailed solar dispatch and permitting delays mounted.

Analysts say the slowdown from 2024’s blistering 33 % growth was inevitable once the Investment Tax Credit dropped from 30 % to 22 % and bonus depreciation expired. Even so, continued double-digit expansion underscores falling hardware prices and corporate demand for clean power-purchase agreements.

Developers are racing to lock in remaining incentives before another step-down in 2026. Consultancy Wood Mackenzie forecasts a year-end installation rush could push 2025 growth back toward 18 %, especially if transmission reforms speed interconnection approvals. The data also shows the technology mix shifting: solar-plus-storage hybrids accounted for 38 % of new megawatts, up from 27 % a year earlier, as developers chase lucrative capacity payments in evening peaks.

The resilience offers a counter-narrative to critics who claim renewables rely solely on policy carrots. Yet trade groups warn that certainty is fading: “Developers can manage one cliff, not a staircase of policy U-turns,” said SEIA vice-president Erin Moran. Lobbyists are pressing Congress for a multiyear glide-path rather than abrupt cuts.