OBBBA Policy Changes Could Cut U.S. Residential Solar Adoption by Up To 46% Through 2030, Despite Strong Long-Term Market Outlook

A new report by Wood Mackenzie highlights the potential slowdown in U.S. residential solar growth following the recent passage of the One Big Beautiful Bill Act (OBBBA), which removes several key policy incentives. One of the most significant changes under OBBBA is the elimination of the Section 25D investment tax credit (ITC) for customer-owned residential solar systems after 2025. According to Wood Mackenzie, this policy shift is expected to negatively impact the residential solar market in the near term.

In its latest analysis, titled “Near-term challenges but long-term potential: evaluating the US residential solar addressable market,” Wood Mackenzie estimates that U.S. residential solar capacity could fall short by as much as 46% through 2030 when compared to its previous business-as-usual forecast from Q2. The absence of the residential ITC will increase the upfront cost burden for homeowners, potentially making solar energy less accessible and delaying adoption in the years immediately following the policy change.

Zoe Gaston, principal at Wood Mackenzie, mentioned, “Many companies will not be able to stay in business. However, the market will eventually adapt, and the remaining players will diversify and find ways to cut costs. Further, rising retail rates will continue to make the residential solar value proposition more compelling. However, a lot can change in 25 years, including technological and product advancements, business model evolution, and cost declines that can accelerate residential solar growth. We expect a more positive outcome than our low-case scenario.”

However, the report also points to significant long-term opportunities. By 2050, the total addressable market (TAM) for U.S. residential solar is expected to reach nearly 1,500 GW. Drawing on data from the U.S. Census Bureau and internal projections, Wood Mackenzie anticipates there will be around 92 million single-family owner-occupied homes in the country by 2050. After accounting for properties that are unsuitable for solar or already equipped with systems, the potential remains high—with more than 70 million homes still eligible for solar installations over the next 25 years.

Even in a conservative scenario where only 12% of the addressable market adopts solar, the U.S. residential sector could still see an additional 150 GW of solar capacity installed by 2050. While short-term market disruptions are expected, the report underlines that long-term growth in residential solar remains promising, driven by evolving market dynamics, cost reductions, and broader decarbonization goals.