Two years ago, a cross-section of Wall Street was very bullish on the community solar sector, with some predicting that it was poised to become the most widespread model for residential solar distribution in the United States. Unveiled for the first time in about two decades, Solar society It entails a small-scale solar model where customers buy equity in a new solar farm in their service area, developers build the project, and subscribers then receive credits that reduce their utility bills by about 10%. Community Solar offers a viable solution for the nearly half of American households unable to install rooftop solar due to factors such as roof shading, issues with property ownership, or specific regulations. Moreover, these solar projects tend to offer Friendly contract terms For people with lower credit scores.
Unfortunately, the community solar boom could end before it properly begins. A New report By Woodmackenzie Through global data, Woodmackenzie revealed that US community solar installations were down 36% year over year in the first half of this year, with only 437 megawatts installed, thanks to Trump’s super bill. OBBBA has softened key tax incentives for clean energy projects, with the bill’s impact expected to grow as the years go by. Woodmac is now certain to be on the lookout for this sector, and community solar installations are expected to shrink by 12% annually through 2030. Total U.S. community solar installations were clocked at 9.1 GW at the end of June 2025, and are expected to exceed 1.3 percent more in taxes than they would suffer. It could reduce expectations by 1.2 GW.
“The final bill provides a critical four-year window for projects already in development to come online and secure the Investment Tax Credit (ITC), supporting near-term construction.Caitlin Connelly, senior analyst at Wood Mackenzie, told PV Magazine. “As of mid-2015, there are more than 9 GW of community solar projects in development, with more than 1.4 GW known to be under construction.“, she added.
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Wood Mackenzie attributed this year’s significant decline to falling volumes in New York and in Maine, after the previous program had recently It has been fixed. New York alone is expected to contribute nearly 30% of the U.S. decline in community solar installations in 2025. Massachusetts, Maryland and New Jersey are also facing similar issues with their transition between iterations of the program, analysts noted, adding that multiple states have I struggled overall To pass new legislation.
Solar stocks shine
However, solar stocks are defying the bearish sentiment spreading through the clean energy sector. Back in July, US President Donald Trump signed the law.”One nice invoice job“, a rollback of several clean energy credits enacted by former President Joe Biden under the Inflation Reduction Act (IRA) of 2022. As widely expected, the OBBBA is far behind various industries in the solar and wind sectors. However, the solar sector has continued to outperform, thanks in large part to U.S. and global solar demand as well as specific provisions within the OBBBA Which favors solar energy manufacturing in the United States. The preferred standard for the solar industry, Invesco Umbrella ETF (NYSEARCA: TAN), comfortably outperformed its oil and gas peers, returning 40.5% on the year to a history of 4.2% by the oil and gas benchmark, SPDR SECTOR SECTOR BOXES (NYSEARCA:XLE), a 14.8% gain before S&P 500.
OBBBA favors solar manufacturing through provisions that incentivize domestic production and simplify the tax credit process, while setting deadlines for construction and hiring in service of solar projects. Specifically, it reserves and clarifies tax credits for solar projects under Sections 48E and 45Y, phasing out wind and solar projects placed in service after December 31, 2027, unless construction begins within 12 months of enactment of the law.
The first umbrella (NASDAQ: FSLR) is one of the companies OBBBA is a big favorite, with shares up 33.6% YTD. UBS recently reiterated a buy rating and raised its price target on FSLR to $275 from $255, saying the company will get a significant boost to the bottom line from OBBBA credits. According to UBS, the company’s 45x tax present value is $75 per share, while the company is expected to grow net cash to $25 per share by Q2 2026. UBS says PT is conservative, noting that it has not factored in additional earnings when First Solar Finish Factory comes online. First Solar’s 3.5 GW annual manufacturing facility in Louisiana is expected to be operational in the second half of 2025. This facility is part of First Solar’s broader strategy to expand its U.S. footprint to more than 10 gigawatts (GW) by 2025, According to manufacturing in Alabama. The Louisiana plant, along with a new facility in Alabama, is a key component of this expansion.
Based in Israel Solaredge (NASDAQ:SEDG) leads the sector with a YTD return of 172.4%. Regarding regulatory changes under OBBBA, Solaredge CEO Shuki Nir says the company’s multiple U.S. cold manufacturing strategy will help it maintain 45x advanced manufacturing credits over the next seven years.
Meanwhile, some residential solar companies are also defying bearish forecasts. California-based residential solar company Sunrun (NASDAQ: RUN) rose 107.8% YTD on the company’s strong cost efficiencies as well as a 70% storage facility rate last quarter. Sunrun installed a record 392 megawatts of storage capacity during the second quarter, good for a 48% year-over-year increase, while solar installations clocked in at 227 megawatts, up 18% year-over-year. Meanwhile, subscriber additions grew 15%, with the company’s total subscribers reaching 941,701 as of June 30.
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By Alex Kimani for Oilprice.com
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