As Federal Incentives Fade, State Support and Cost Cuts Drive Rooftop Solar Growth in the U.S.

WASHINGTON/AUSTIN, Sept. 2, 2025 — Successive governments in the US have prioritized usage of rooftop solar systems, helping the country to compete with China in this form of renewable energy.

Even though policies regarding clean energy by President Trump administration have led to the withdrawal of subsidies, putting pressure on companies but cost-effectiveness of rooftop solar is still a major attraction and has been driving consumers to be benefitted by it.

Warm-weather states have seen implementation of pilot projects that have resulted in a runaway success. Based on positive feedback from states such as Texas, the installation of rooftop solar panels was extended to other states as well.

As per the U.S. Department of Energy, or DOE, there were more than 50 gigawatts of U.S. rooftop solar systems installed in 2024 on more than 5 million homes and commercial buildings.

Official estimates suggest that rooftop solar systems cost more per kilowatt than utility-scale systems, in many areas of the country they offer households an opportunity to save money on electricity costs.

There is a huge scope for advanced research and development in solar panel design, energy yield, grid integration, and permitting that could reduce costs and enable greater savings for consumers.

For several years, rooftop solar sector has been benefitted by Residential Clean Energy tax credit, or 25D, that helped to offset its cost but by end of 2025 the subsidy will be phased out.

While companies are set to bear the brunt of the cuts to federal incentives in the law passed by Republicans and signed by President Donald Trump earlier this month, cost cutting measures are imminent for the green energy firms to stay in the business.

Bright Side of Solar Companies You Should Know

Affordable Solar Systems: Amid the gloom and doom, there is hope for the rooftop solar sector which is projected to witness a cost reduction in the US market, which is known for higher costs compared to many other countries.

As per the National Renewable Energy Laboratory, the cost of U.S. residential solar systems fell from an average of $8.60 to $2.70 per watt from 2010 to 2023, a 69 percent decline.

Installation of rooftop solar has been affordable in large part because solar panels themselves have become much cheaper. While tariffs have jacked up U.S. prices in recent years, solar equipment costs now represent only a small part of total installation costs.

Managing Soft Costs: The price determining factor for rooftop solar in the US has been the “soft costs” that includes customers acquisition, designing systems to meet households’ needs, tackling the time-consuming processes of getting permissions, securing utility interconnections, and offering long-term maintenance and operations support. These are the areas that the industry will need to improve in order to make solar more affordable once tax credits disappear.

Role of State and Local Governments: State and local governments have a major role in driving down the “soft costs”.

Besides, laws have been passed by the states to streamline solar project, while cities and counties have installed “instant permitting” software platforms which help to reduce wait times and administrative costs.

Some utilities are starting to offer incentives to customers that enlist solar and battery systems in “virtual power plant” programs that reduce grid stresses and utility costs.

A Financial Times report quoting EnergySage, a clean energy marketplace, has stated that on average, installing solar panels on top of homes or businesses costs about $20,000. However, that total is much less than the cost of buying electricity from the grid for years.

What are Growth Opportunities for Companies?

Solar power component manufacturing components in the US still have the advantage to benefit from tax policy and tariffs, despite the Trump administration’s reluctance to renewable energy.

There have been business expansions by some big manufacturers such as First Solar and Hanwha Qcells, while smaller players are also eyeing opportunities.

New names that have forayed into the market include T1 Energy, a solar company based in Austin, Texas, which announced last month that it was forging a collaboration with New York-based Corning Inc. to set up a supply chain in which nearly all components would be produced in the US.

T1 is part of a cluster of businesses that are helping to make Texas a leader in solar manufacturing.

Notably, Texas has 18 solar component facilities online, more than any other state, according to a report from the American Clean Power Association, a trade group.

Even after the completion of all announced projects across the country, Texas would remain the leader with 26 facilities, followed by Ohio with 16, and Alabama with 9, the report said.

Laws have been passed by the states to streamline solar projects, while cities and counties have installed instant permitting software platforms which help to reduce wait times and administrative costs.

Inputs from Saqib Malik

Editing by David Ryder