After a record-breaking year in 2024, the U.S. community solar market slowed in the first half of 2025, with installations declining 36% year-over-year, resulting in 437 MWDC of new capacity installed, according to a new report released by Wood Mackenzie in collaboration with the Coalition for Community Solar Access (CCSA).
Due to the passage of HR1 and related federal policy changes, Wood Mackenzie’s cumulative five-year community solar outlook decreased by 8% compared to the outlook published in Q2 2025. HR1 has fundamentally altered the long-term market landscape, while slowing growth in mature markets, particularly New York’s community solar program, is contributing to an expected 29% national contraction in 2025.
“Overall, we expect national installed community solar capacity will contract by an average of 12% annually through 2030,” said Caitlin Connelly, senior analyst and lead author of the report. “The final bill offers a crucial four-year window for projects already under development to come online and secure the investment tax credit (ITC), supporting near-term buildout. As of mid-2025, there are over 9 GWDC of community solar projects under development, with over 1.4 GWDC known to be under construction.”
Credit: Wood Mackenzie
Growth in emerging markets slows and new markets face challenges
According to the report, the market contraction in the first half of 2025 is primarily driven by steep declines in volumes in New York and in Maine, where the current program was recently overhauled. Programs in some state markets are close to or at capacity, and several programs in states including Maryland, Massachusetts and New Jersey remain stalled in transitions between program iterations.
“The early expiration of the ITC will only add to this difficulty given the window for any new projects to secure tax credits is so small,” Connelly said. “The passage of legislation in new markets could potentially add upwards of 1.1 GWDC through 2030.”
New state markets could bring more capacity to the market, but there has been limited success in passing community solar program legislation so far this year.
“Customer demand for community solar has never been stronger, and we’re seeing states step up with historic expansions like New Jersey’s 3,000 MW and Massachusetts’ 900 MW,” said Jeff Cramer, president and CEO of CCSA. “These bright spots show what’s possible when policymakers work to unlock capacity. At the same time, this report makes clear the challenges ahead — from federal uncertainty to interconnection delays and program caps — that must be addressed to realize the full potential of community solar and deliver the resilient, affordable power communities are asking for.”
Subscriber acquisition costs declined in H1 2025, but LMI market challenges persist
Credit: Ampion
Subscriber acquisition costs decreased 5% from the second half of 2024 on average across all customer segments. Corporate demand for community solar remains high, driving up commercial solar’s share of total community solar capacity to 53%. However, developers and subscription management companies face increased headwinds in subscribing low-to-moderate income (LMI) customers. Difficult subscriber acquisition dynamics lowered the share of community solar capacity serving LMI subscribers to 9%. The customer segment remains the costliest to subscribe at $102/kW compared to $72/kW for non-LMI residential customers.
As new community solar programs struggle to take off, community solar developers increasingly target alternative distributed solar programs as pathways for long-term growth.
“Non-residential distributed solar, which typically encompasses projects sized between 2 to 20 MWDC, is extremely well-positioned for growth,” Connelly said. “Utilities are increasingly appreciating the value of community-scale resources because they can be deployed quickly, with storage and close to customer load.”
Cumulative community solar installations currently total 9.1 GWDC and are projected to exceed 16 GWDC by 2030. Wood Mackenzie has developed high- and low-case scenarios to describe market uncertainties:
- High case: An 18% uplift to the five-year outlook through favorable state policy changes and efficient interconnection reform, adding 1.3 GWDC
- Low case: A 16% contraction due to complex tax credit qualification guidelines and limited state intervention, reducing outlook by 1.2 GWDC
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