The One Big Beautiful Bill Act (OBBBA), recently passed in the United States, is expected to reduce the adoption of residential solar systems significantly in the coming years. According to a new analysis by Wood Mackenzie, the elimination of key market drivers, including the Section 25D investment tax credit (ITC) for customer-owned residential solar systems after 2025, will lead to a potential drop of up to 46% in residential solar capacity by 2030 compared to earlier projections.
This policy change will make it more difficult for homeowners to afford solar installations, creating a major disruption in the near-term market. Wood Mackenzie’s latest report, titled “Near-term challenges but long-term potential: evaluating the US residential solar addressable market,” highlights the extent of the impact. Without the ITC, many companies in the solar sector may not survive the next few years. However, the industry is expected to adjust over time.
Zoe Gaston, principal at Wood Mackenzie, stated that many companies may not stay in business, but the market will adapt. She added that the remaining solar companies are likely to diversify their offerings and find new ways to reduce costs. Despite the removal of certain incentives, rising retail electricity rates will continue to support the economic benefits of residential solar.
The long-term outlook remains positive. The total addressable market (TAM) for residential solar is projected to grow to nearly 1,500 GW by 2050. Using data from the US Census Bureau and internal modeling, Wood Mackenzie estimates that there will be around 92 million single-family, owner-occupied homes in the country by mid-century. Of these, more than 70 million homes could potentially install solar systems over the next 25 years, excluding unsuitable properties and homes that already have solar.
Even in a conservative scenario where only 12% of the addressable market adopts solar, the sector could still add 150 GW of capacity by 2050. Technological advancements, new business models, and falling costs are all factors that could further accelerate adoption beyond current low-case estimates. The report concludes that while the short-term challenges are significant, the residential solar market in the US holds strong long-term potential.
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