Despite the down year, Wood Mackenzie forecasts the market to more than triple in size by 2035.
The residential solar industry in the United States experienced one of its most difficult years in recent memory as installations nationwide declined 31% compared to 2023.
The 4.7 GW installed in 2024 marked the first annual contraction of the industry since 2017, said Wood Mackenzie.
Last year was predicted to be a year of recovery off the slowed growth of 2023, but instead challenges persisted. Chief among those challenges were higher-for-longer interest rates, state policy changes like cuts to net metering in California and stabilizing natural gas and electricity prices. The California market installed the most solar in 2024 but retracted 45%.
Installers suffered from financier instability, customer acquisition and other soft cost issues and constrained cash flows. Some major installers did not survive 2024. This included the bankruptcy of SunPower and Titan Solar Power. Sunnova Energy is now another major player in the market facing turmoil and potential bankruptcy.
Illinois ranked third in residential solar installations in 2024, rising the ranks and standing as one of the few states to have growth. However, this growth ramp may be limited, as the bump was largely attributed to customers rushing in to secure better net metering terms with their utility. The state transitioned away from net metering on Jan. 1, 2025.
Wood Mackenzie downgraded its outlook for residential solar this year and beyond. In 2025 it cut recently its growth forecast by 15%. However, Wood Mackenzie expects a modest recovery in 2025 with 9% year-over-year growth. It expects the California market to stabilize and grow by 7% as installers have gained proficiency in selling solar-plus-storage under the NEM 3.0 rules.
Despite the ongoing challenges, and federal policy uncertainty regarding the Investment Tax Credit (ITC), Wood Mackenzie said the fundamentals for residential solar remain strong.
“The residential solar market will continue to grow steadily, driven by retail rate inflation, resiliency concerns, product innovation, and third-party ownership momentum with a focus on ITC adder qualification,” said Wood Mackenzie.
In its base forecast, Wood Mackenzie expects residential solar capacity will more than triple over the next decade, adding more than 96 GW by 2035.
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