Solar Rout Deepens As Market Faces Possible 30% Drop

The US residential solar industry is facing a sharper downturn than investors may have expected after President Donald Trump's One Big Beautiful Bill ended a lucrative homeowner tax break for buying panels. Freedom Forever, one of the nation's largest solar installers, filed for bankruptcy last month, citing the phaseout of federal tax credits and Trump's executive orders aimed at limiting the growth of renewables. The pressure is spreading across the biggest national names in home energy, with Tesla , Enphase Energy , SolarEdge Technologies and Sunrun all reporting soft first-quarter sales. This has added to analyst concerns that the rooftop solar market could shrink as much as 30% this year. Joe Osha, a clean energy analyst at Guggenheim Securities who recently dropped coverage of Sunrun, described the industry as a zero-growth sector, underscoring how quickly sentiment has shifted from expansion to retrenchment.The weakness has been building for several years. Higher interest rates have made it more expensive for homeowners to finance solar systems that can cost $20,000 or more, while tariffs on solar imports from Southeast Asia have raised equipment costs and squeezed margins. California, the largest home solar market, also reduced state incentives for new solar-only systems starting in 2023, putting more pressure on demand. Against this backdrop, Sunrun's major national rivals SunPower and Sunnova Energy International filed for bankruptcy in 2024 and 2025, respectively. The Trump administration's law may now be the industry's biggest hurdle, ending the homeowner solar tax credit at the end of last year, rapidly phasing out a federal subsidy available to companies that lease residential solar systems, and introducing new anti-China restrictions that have made some longtime bank participants hesitant. Enphase Chief Executive Officer Badri Kothandaraman said the market is going through a major disruption and that residential solar is being rebuilt right now.For investors, the near-term picture remains difficult, even as rising utility bills should theoretically make rooftop solar more attractive. Ohm Analytics expects second-quarter solar interconnections to decline by more than a quarter from the same period a year earlier, and the firm forecasts a 22% decline for the full year. Enphase shares have fallen nearly 30% from their year-to-date high in early February, while Sunrun dropped close to 40% after reporting fourth-quarter earnings in late February before rebounding as much as 23% on Thursday after first-quarter earnings and sales topped analyst estimates. SolarEdge has moved in the opposite direction, rising about 40% so far this year partly on hopes for stronger sales in Europe, where power prices have jumped from the war in Iran. Battery storage could be one possible path through the downturn, helped by falling costs and tax-credit eligibility through 2033. In California, about 90% of solar panels sold now come with a battery, according to Ohm Analytics, while states including Texas, California and New York are establishing or developing policies that reward homeowners for participating in distributed power plant programs. Sunrun, which says it has built the nation's biggest home battery network, sees the current market dislocation as a possible chance to gain share, while SolarEdge Chief Executive Officer Shuki Nir said there could be short-term hiccups but long-term demand remains present.