The future of community solar is dimming, hampered by federal attacks on clean energy and shifts in state markets.

Working in collaboration with the Coalition for Community Solar Access, an industry trade group, Wood Mackenzie forecasts that by the end of 2025, installations will fall by 29% from 2024’s record high of 1.7 gigawatts. According to the analysis, growth will likely contract by an average of about 12% annually through 2030.

“I’m dismayed by this report,” said John Farrell, co-director of the research and advocacy nonprofit Institute for Local Self-Reliance. ​“Of the places where we have policies [that drive community solar], it looks like things are slowing down.”

Why community solar is buckling despite its benefits

Community solar makes clean power accessible to those who can’t put solar panels on their roofs — be it because they rent, can’t afford them, or have other reasons. Households can subscribe to a share of an off-site array, which is typically 2 to 20 megawatts, per the report, to get credit for the power and save on their energy bills. Third-party developers usually build and own these installations — not utilities.

About 9.1 gigawatts of shared solar have been installed in the U.S. to date, according to the report’s authors. They expect community solar capacity to reach roughly 16 GW by 2030.

The megabill that Republicans passed in July is a major reason for the community solar market’s shake-up. The law set an early expiration date for a key tax credit worth 30% to 50% of the cost of a project. Developers once had until 2034 to claim it; now companies must either start construction by July 2026 and finish within four years or start producing power by the end of 2027.

Because of the law’s passage, Wood Mackenzie slashed its community solar figures through 2030 by about 8%, or 655 megawatts, from its prior forecast, said Caitlin Connelly, senior analyst at the firm and lead author of the report. 

But factors at the state level are also contributing to the slowdown. In particular, New York and Maine are driving the steep decline.

Developers in New York, a mature market, are having trouble finding sites, paying higher permitting and land costs, and having to wait an average of nearly three years to get connected to the grid, making projects more expensive to develop, Connelly said.

Meanwhile, in Maine, two regulatory changes are at play. Last year saw record growth as developers sprinted to get projects done by the December phaseout of the state’s net metering program, leading to fewer in the pipeline now, Connelly noted. In June, legislators also passed a bill that retroactively overhauled compensation for community solar power and added fees for new and established projects. The industry has said these provisions will make the state a ​“pariah for investors.”

Some states, such as Virginia and New Mexico, also have caps on the size of their community solar programs that are limiting new developments, according to Connelly. 

And more federal turbulence could be ahead.

“The impact of [losing] Solar for All is one that we are tracking closely,” Connelly said, as the move could stymie community solar in places where it’s just getting off the ground.

While this year is likely to be a rough one for community solar, Connelly sees growth returning in 2026 and 2027. This is in part due to rebounds in Massachusetts and New Jersey, both of which are transitioning into new iterations of existing programs.

Massachusetts will open up its Solar Massachusetts Renewable Target program, SMART 3.0, to developers on October 15. And New Jersey recently eliminated a 150-megawatt annual cap and unlocked a whopping 3 gigawatts of community solar capacity.

But that growth is just a temporary reprieve. Over the longer term, the forecast shows community solar installations trending down. 

How to revive community solar growth

A few factors could change the sector’s fortunes, however.

For one, if states were to start new community solar programs, as well as address interconnection bottlenecks, they could drive up to 1.3 gigawatts of additional capacity through 2030, according to the report. But ​“we don’t really see any new programs opening up, at least in the near term,” Connelly said. ​“Policymakers have made a lot of progress in some state markets over the last six months to a year, but the difficulty is getting that legislation over the finish line.”

In deep red Montana, for example, legislators approved a new community solar program, with 100 in favor and 50 opposed, underscoring the model’s growing appeal to Republicans. But Gov. Greg Gianforte (R) vetoed the bill, claiming that it could result in ​“unreasonable costs” being foisted on other energy customers.

Only 24 states plus Washington, D.C., have passed community solar legislation as of February, according to the National Renewable Energy Laboratory. Wisconsin, Michigan, Ohio, and Iowa are all considering shared-solar bills, said Jeff Cramer, president and CEO of the Coalition for Community Solar Access.

Other states could be tempted to authorize a flood of clean, cheap solar power. The grid is facing soaring demand from data centers, electric vehicles, buildings, and manufacturing, and distributed community solar is among the fastest options to deploy.

“If you want to build a new gas plant right now, you’re going to need five-plus years minimum to do it. You want to build a new utility-scale [solar or wind] facility — at least five years as well, and that’s pending the development of new transmission,” Cramer said.

By contrast, community solar has a typical development timeline of six months to two years, he added. ​“The only kind of capacity that we can build close to load and faster than those timelines to meet load growth and grid congestion is distributed solar.”