Rooftop solar is in for a tough few years in the US

This article is part of our ​“Chart of the Week” series.

With solar panels getting cheaper each year and utility bills soaring, you might expect rooftop solar to be booming in the U.S. That’s not the case.

Instead, thanks in large part to the Trump administration’s revocation of federal tax incentives, residential rooftop solar installations in 2026 are expected to fall to their lowest level since 2020, per new BloombergNEF data.

Nearly one year ago, President Donald Trump signed the One Big Beautiful Bill Act into law and eliminated a 30% federal tax credit for rooftop solar systems. It was a major blow to an industry that was already struggling because of high interest rates, tariffs, and a seismic policy change in California, the state that has led the nation on rooftop solar adoption. The legislation also eliminated the 30% tax credit that applied to battery backup systems, which homeowners increasingly pair with photovoltaics.

Yanking away tax credits makes it costlier to install rooftop solar, so it’s no surprise the move dampened sales. People who buy rooftop solar systems are mainly looking for relief from high utility bills, and solar installations are already more expensive in the U.S. than in many other countries. Residential solar costs $2.58 per watt, on average, compared with around $1 per watt in Australia, a global leader in the space.

The outlook isn’t great. BNEF analysts think it will take more than a decade for the industry to match the installations record it set back in 2023. To be fair, that record happened under some very specific circumstances: The Inflation Reduction Act, passed the previous year, had boosted the federal tax credit for rooftop solar, and, at the same time, Californians were sprinting to install systems before the state did away with its lucrative compensation scheme in April 2023.

Still, there are some glimmers of hope. In California, the residential solar market is set to rebound this year and grow by 17% from last year. Meanwhile, Florida, the No. 2 state for rooftop solar, is set to see its installations grow by a staggering 62% in 2026.

That suggests the biggest state markets for rooftop solar are fairly resilient. Some combination of ample sun, high awareness of solar, and rising utility bills has enabled the clean energy tech to keep growing even though a significant slice of homeowners already have their own panels.

Meanwhile, although its potential is much more modest, a far smaller and more accessible form of residential solar is sweeping the nation: balcony solar. Several states have passed legislation green-lighting these DIY plug-in solar systems. They can’t deliver the same wattage as a classic rooftop setup, but they’re relatively cheap and available to renters — not just homeowners. Maybe that emerging boom can help offset the bust for rooftop systems.