Despite Short-Term Challenges, Underlying Factors Suggest Long-Term Growth In Solar

By James Schulze

This article discusses policies, economic factors, and market dynamics that will affect the trajectory of the solar market in the short and long term. It also touches on ways solar installers can sustain and grow their businesses, even in a short-term contraction.  

The U.S. residential solar industry has experienced several ups and downs in recent years. Solar installers have found themselves navigating a complex landscape that twists and turns with changes in policy, economic factors and market dynamics. Understanding each of these elements is critical to assessing the industry’s trajectory over the next year.

Policy decisions that affect the solar industry

The new administration’s environmental priorities stand in stark contrast to the environmental policies of the previous administration. The Trump administration has already implemented policies that favor fossil fuels over renewable sources: 

• Tariffs on imported solar equipment – The talk of tariffs has dominated recent news streams and continues to evolve. As many solar panels and components are made in Asia and other parts of the world, the tariffs will inevitably raise the costs for solar installations as well as intensify existing supply chain issues. Perhaps one positive note is that consumers who have been debating whether or not to install solar panels may just move ahead quickly to avoid increased costs, especially if tariffs are delayed.
• Reduction in clean energy support – Federal support for renewable energy projects has been scaled back. Earlier this year, the new administration imposed a moratorium on offshore wind energy leasing. They have also cut funding for green energy projects and have reversed some regulations that favored renewables. Rumor has it that the “One Big Beautiful Bill” may also repeal or restrict clean energy tax credits and incentives. All of these actions would likely hamper the growth of solar installations. 

Economic factors that affect the solar industry

While many economic factors could have an impact on the solar industry, two factors have a pronounced effect:

• Rising electricity costs – The price of residential electricity has steadily increased over the last seven years and is expected to continue. It trends above the overall Consumer Price Index, making it a pain point for most homeowners. Consumers may increasingly see solar energy as an attractive option for reducing their utility bills. This economic savings may sustain interest in residential solar installations.
• High interest rates –  Many solar installation projects are financed. High interest rates means increased financing costs and will likely deter some homeowners from making the investment in solar energy. While the Federal Reserve has made some downward adjustments to rates in the last year, they are facing substantial pressure to reduce the rates further. For now, the high interest rates have contributed to slowed adoption of residential solar systems.  

Market dynamics that affect the solar industry

Some market dynamics should have a positive impact on the industry in the long term:

• Domestic manufacturing initiatives – In response to tariffs, there has been a push to bolster domestic manufacturing of solar panels and components. This will likely lessen some supply chain issues in the future, but it will not be quick. Establishing infrastructure requires time and investment.
• Technology advances – Technology of solar panels and components is evolving and many exciting new technologies are on the horizon. These innovations will increase efficiency, lower costs, and expand the applications of solar energy, ultimately making solar installations more attractive.

Projected trajectory of the solar market

Most estimates predict that solar installations will decrease in the short term. Solar Energy Industries Association estimates that from 2025 to 2027 solar installations will decline at an average rate of 7%. However, nearly 43 GWdc on average will be added each year between 2025 and 2030. There will be several solar projects for installers to pursue. 

After this short-term contraction, analysts anticipate the effects of domestic manufacturing ramp ups and technological developments will take hold. Costs may decrease, revitalizing the solar market. The pain of high electricity prices will continue to grow, heightening consumers’ interest in solar solutions. 

How solar installers can grow their business in this environment

Despite the uncertainty and expected market contraction, solar installers can still sustain and even grow their businesses in this environment. Successful solar installers will focus their marketing efforts on identifying the homeowners who are ready to buy now. This means shifting your marketing dollars to:

• Real-time leads – These leads connect you with highly interested homeowners, immediately after they have provided some qualifying information online. Your sales team will contact these consumers within 24 hours of the opportunity being posted. These leads are exclusive to you, meaning they are not sold to any other solar installer.
• Appointments – These leads take it one step further and set up appointments between highly interested homeowners and your sales team. All homeowners are pre-qualified to make sure your team does not waste their time pursuing opportunities that don’t make sense.

If you would like more information on how you can grow your solar installation sales in this environment, give The Leads Warehouse a call at 1-800-884-8371 or visit our website at http://theleadswarehouse.com.