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The federal homeowner solar credit ended after 2025. Here is what the market data and the safety rules mean now.

Solar Energy Market Size and Growth in 2026: What the Numbers and the Tax Credit Change Mean for Homeowners

Solar market size depends on what you count: 600+ GW added globally in 2025, 43.2 GWdc in the US, and $217B to $625B in private dollar estimates.

11 min read

There is no single "solar market size," because the answer changes with what you measure. By capacity, the International Energy Agency reports that global solar PV additions rose about 12% in 2025 to more than 600 GW, bringing installed capacity to around 2,800 GW, and Wood Mackenzie and SEIA report that the US installed 43.2 GWdc in 2025, a 14% decline from 2024. By dollars, private research firms disagree sharply: published 2025 global estimates run from about $217 billion to $625 billion, depending on scope. For a US homeowner the most useful market fact is a policy one. The federal residential clean energy credit (Section 25D) terminates for expenditures made after December 31, 2025, and the residential segment is shrinking in 2026 as a result.

The earlier version of this article said the global market "was valued at USD 160.3 billion in 2021" and would grow at a 15.7% CAGR from 2022 to 2030, attributed to Grand View Research. We could not open that report to confirm the figure or its scope, and its base year is now five years old, so it has been removed rather than repeated.

What the Best-Sourced Numbers Say

Start with measurements that come from agencies and industry trackers with disclosed methods, then treat dollar estimates separately.

Worldwide (IEA, published April 2026):

  • Solar PV capacity additions in 2025 rose about 12% and passed 600 GW for the first time. China added nearly 370 GW, the European Union almost 70 GW, and India almost 50 GW, according to the IEA Global Energy Review 2026.
  • Solar PV accounted for more than three-quarters of new renewable capacity additions worldwide.
  • On investment, an IEA World Energy Investment 2026 launch presentation compares roughly USD 170 billion of solar PV investment in 2015 with about USD 400 billion in 2025, alongside a 76% fall in cost per gigawatt. That is the closest thing to an agency-backed dollar figure, and it measures money invested in projects, not the "market size" that commercial reports quote.

United States (SEIA and Wood Mackenzie, EIA):

  • The US installed 43.2 GWdc in 2025, down 14%. Commercial grew 6%, community solar fell 25%, and utility-scale fell 16%, per Wood Mackenzie's review of the year. pv magazine's summary of the same report says solar was 54% of all new US generating capacity and that the residential segment saw a slight decline with flat pricing.
  • For the second quarter of 2026, reporting on the SEIA and Wood Mackenzie Q3 2026 report says the US installed 11.4 GWdc, up 45% from a year earlier, while the residential segment installed 995 MWdc, down 12% year over year. The full report costs $7,500 and SEIA's own page would not load for us, so we are relying on that secondary summary and flag it as such.
  • The same summary cites an expected 23% residential contraction in 2026 and average residential growth of about 6% a year from 2027 to 2031. Forecasts like this have already moved several times since the credit change, so treat them as a range, not a promise.
  • The US Energy Information Administration says solar was about 6.7% of US utility-scale generation in 2025. Small-scale systems, mostly rooftop, are counted separately: 59,506 MW of capacity at the end of 2025 and about 93 billion kWh generated.

US homes (Lawrence Berkeley National Laboratory):

Notice that installed capacity is measured in gigawatts, while the residential market is best understood in customers and systems. A rooftop system for one home is a tiny fraction of a gigawatt, which is why utility-scale projects dominate every national total.

Why Dollar Estimates Disagree by Nearly 3x

Three commercial reports we could open put the 2025 global market at very different levels:

The gap comes from choices that these firms rarely reconcile in public:

  1. Scope. Some count only modules and cells; others add inverters, mounting, monitoring, and grid connection. Some include concentrated solar power, batteries, or installation labor.
  2. Revenue versus investment. Manufacturer revenue, retail spending, and project investment are different totals for the same panels.
  3. Prices and currency. Module prices fell sharply over the past decade, so a report built on unit volumes and one built on spending diverge quickly.
  4. Forecast method. A CAGR is an assumption from a starting year. It cannot be checked against reality until the years pass.

The practical rule: use gigawatts from the IEA, EIA, or SEIA and Wood Mackenzie when you need a measurement, and treat private dollar figures as labeled estimates from one firm's definitions. For comparison, the pest control market guide shows how government data anchors a market number when it exists.

What Changed for Homeowners in 2026

The biggest change for a homeowner is not the size of the global market. It is who can claim the tax credit.

  • Section 25D is over for new purchases. The IRS says the residential clean energy credit terminates for any expenditure made after December 31, 2025. An expenditure is treated as made when the original installation is completed, so a signed contract in 2025 does not qualify if the system was finished in 2026. ENERGY STAR's tax credit page lists the same December 31, 2025 end date for solar, wind, geothermal heat pumps, and battery storage.
  • Leases and power purchase agreements are different. Third-party-owned systems can still use a separate business credit, Section 48E, under conditions. According to Solar Power World's explanation of the law, projects must have started construction by July 4, 2026, or be placed in service by the end of 2027. As of September 20, 2026, that means most new third-party projects are working against the 2027 deadline. The Department of Energy notes that with a lease or PPA, the homeowner does not receive the tax credit; any savings has to come through the contract price.
  • Leasing has grown. Berkeley Lab reports that residential third-party ownership rose sharply to 43% in 2024, from 26% the year before, and that loan-financed systems had a higher median price than cash purchases ($4.7 per watt versus $3.5), partly because loan fees are folded into the up-front price.
  • Selling costs rose. Wood Mackenzie expects residential customer acquisition costs to rise 40% to $0.84 per watt in 2026 as installers compete for fewer customers. That does not automatically raise your price, but it explains the aggressive sales offers.

Tax rules are technical, and this article is not tax advice. If you finished a system in 2025, confirm how to claim it with the IRS guidance or a tax professional. If you are shopping now, assume there is no federal homeowner credit for a system you own, and check separately for state, utility, or local programs.

Before You Sign: Safety and Installer Checks

A market that is contracting rewards fast sales tactics. These checks matter more, not less.

  1. Confirm credentials. The Department of Energy recommends choosing a qualified installer with certification, such as NABCEP, and lists pushy sales tactics, unlicensed installers, and unclear financing terms as red flags. Its fire safety guide for consumers also points to the National Solar Licensing Database and NABCEP for verifying installers.
  2. Get the permit. Local governments review solar permits for structural, electrical, and fire safety provisions, according to a National Laboratory of the Rockies (formerly NREL) permitting training. A permit and final inspection are your independent check on the installer's work. Be wary of any offer to skip them.
  3. Ask about rapid shutdown. The National Electrical Code requires rapid shutdown on PV systems installed on buildings so firefighters are not exposed to high DC voltage on the roof. In the 2020 code described by IAEI, conductors outside the array boundary must drop to 30 volts or less within 30 seconds, and those inside to 80 volts or less. Code editions differ by state and city, so ask which edition applies and how your system complies.
  4. Look for the label and switch. IAEI describes a permanent label at the service equipment explaining the rapid shutdown switch. Find it, and know where it is.
  5. Tell your fire department. DOE suggests notifying the local fire department of the installation and confirming it has solar safety training.
  6. Call your insurer. DOE notes that coverage is typically included in homeowners' policies, but confirm it for your policy and any leased equipment.
  7. Plan for the installer disappearing. Large residential companies have failed. Sunnova, for one, filed for Chapter 11 protection on June 9, 2025. Ask in writing who would honor the equipment, workmanship, and service commitments if your installer closed, and keep every contract, permit, and inspection record.

The DOE says a solar system spontaneously bursting into flames is extremely rare, and that fires more commonly start from internal wiring problems that then spread to the roof. That is the reason for professional installation, permits, and inspections.

What Not to Do

  • Do not climb onto the roof to inspect or clean the array yourself. DOE lists electrical shock, stress on module glass, and slippery surfaces as hazards even for firefighters.
  • Do not sign on the day of the pitch. Compare at least two written quotes, including the price per watt, equipment models, financing terms, and the workmanship warranty.
  • Do not schedule other roof-edge work without telling the installer. If you have gutters to clean or gutter guards to install, plan the job around the array, and read the guide on cleaning gutters and downspouts safely first.
  • Do not rely on a "guaranteed" savings figure that ignores your utility rates, shading, and roof condition.

When to Call a Professional

Call a licensed electrician or the installer if the system shows an error, produces far less power than expected, or if you see damaged wiring, cracked modules, or scorch marks. The DOE advises reporting issues caused by design flaws, component defects, or faulty installation promptly. If you smell burning or see smoke, leave the building and call 911. If you want app-based monitoring or a battery, our overview of the smart home market is a starting point, but the installer should handle any electrical connection.

Frequently Asked Questions

What is the solar energy market size?

It depends on the measure. The IEA reports more than 600 GW added worldwide in 2025 and about 2,800 GW installed. Private dollar estimates for 2025 range from about $217 billion to $625 billion, and no agency publishes a single dollar total.

What is the solar market CAGR?

Commercial forecasts we could open range from 6.21% to 10.9% a year for 2026 to 2035 (Precedence Research and Market.us), with another firm projecting a much faster path to 2030. These are forecasts based on each firm's definitions, not measurements.

Is the federal solar tax credit still available for homeowners?

For systems you own, no. Section 25D ended for expenditures made after December 31, 2025, and an expenditure counts when installation is completed. Third-party-owned systems can still use a business credit under separate rules, but the homeowner does not claim it.

Is US residential solar growing or shrinking?

Shrinking in 2026. SEIA and Wood Mackenzie data as reported show residential installs down 12% year over year in the second quarter, with a 23% contraction expected for the year and a return to growth projected from 2027.

Is rooftop solar a fire risk?

DOE says a system spontaneously igniting is extremely rare, but installation quality matters. Rapid shutdown, permits, inspections, and clear labeling exist to protect occupants and firefighters.

Do I need a permit for solar panels?

Local governments generally review and permit residential solar for structural, electrical, and fire safety. Ask your installer to handle it and give you the approved permit and inspection record.

Sources

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