A few years back, a diverse group from Wall Street expressed strong optimism for the community solar sector, with some experts forecasting it would emerge as the dominant model for residential solar power distribution across the United States. Introduced approximately twenty years ago, community solar refers to a small-scale solar initiative where consumers buy shares in a local solar farm. Developers undertake the construction, and subscribers enjoy credits that can reduce their utility bills by around 10%. This model provides an effective alternative for nearly half of American households that cannot install rooftop solar panels due to various factors, including shading, property ownership challenges, or regulatory issues. Additionally, these solar initiatives often feature more favorable contract terms for individuals with lower credit ratings.
Regrettably, the anticipated surge in community solar might be stalling before it truly kicks off. A recent report from Wood Mackenzie, a global leader in data, research, and consulting services, highlights a 36% year-over-year decline in U.S. community solar installations during the first half of the year, with only 437 MW installed. This downturn is attributed largely to the One Big Beautiful Bill Act (OBBBA) initiated during Trump’s administration, which significantly reduced tax incentives for clean energy projects. The outlook is expected to worsen in coming years according to Wood Mackenzie, which predicts a 12% annual contraction in community solar installations through 2030. At the end of June 2025, total U.S. community solar installations were reported at 9.1 GW, with expectations surpassing 16 GW by 2030. However, Wood Mackenzie sees limited recovery potential, estimating that installations might exceed the predicted figure by 1.3 GW under favorable state policies, while complications with tax credits could reduce the scenario by 1.2 GW.
“The final bill provides a critical four-year period for projects already underway to become operational and secure the Investment Tax Credit (ITC), facilitating immediate growth,” noted Caitlin Connelly, a senior analyst at Wood Mackenzie, in a statement to PV Magazine. “As of mid-2025, there are more than 9 GW of community solar projects in development, with over 1.4 GW currently under construction,” she continued.
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Wood Mackenzie attributes this significant drop in installations this year to decreased activity in New York and Maine, particularly after the former’s recent overhaul of its program. It’s estimated that New York alone will account for almost 30% of the nationwide decrease in community solar installations for 2025. Analysts have observed that states like Massachusetts, Maryland, and New Jersey are facing similar challenges as they iterate program changes, and many states have struggled generally to implement new laws.
