Small-Scale Solar Panel Installations Soar Through Subsidies, While Solar Cell Costs Plummet

What could be more appealing than generating electricity from sunshine? Ever since scientists at the famed Bell Laboratories first demonstrated a solar cell based on silicon in 1954, solar power has been seen as one of the most desirable, if technically challenging, means of creating electricity or heat.

Solar power accounted for about 1.1 quadrillion BTUs (British thermal units), or 12% of all renewable energy (of all types) consumed in the U.S. during 2024 according to the U.S. Department of Energy. Installed solar power capacity on a global basis rose from only 41,345.18 megawatts in 2010 to 1,865,490 megawatts in 2024, according to the Energy Institute.

The U.S. Inflation Reduction Act, signed by the Biden administration in August 2022, at one time established a tax credit of 30% of total investment in clean energy production (including solar) as well as stand-alone energy storage projects regardless of the energy source. However, the Trump administration’s One Big Beautiful Bill Act of 2025 ended the tax incentives, increased compliance burdens and prioritized U.S. manufacturing of solar panels. The elimination of certain tax credits made it more expensive to fund a solar installation, and slowed the solar installations in the U.S. Also, the industry was accustomed to importing massive numbers of solar panels from China and elsewhere.

On the other hand, solar panel costs have plummeted in recent years at manufacturing plants worldwide, due to higher volume manufacturing combined with increases in the efficiency of the output of the panels. While firms in the U.S. and EU that install panels or finance their purchase posted good growth, much of the demand for the solar panels themselves was to the benefit of manufacturers based in China. Chinese manufacturers took vast amounts of global market share for solar panels away from makers based in the U.S., Germany and Japan. However, today some Chinese manufacturers are building large plants in the U.S. For example, Trina Power, one of the world’s largest solar panel manufacturers, built a $200 million plant near Dallas, Texas. The plant has since been purchased by a U.S. company, T1 Energy (formerly FREYR Battery).

China continues to dominate the world’s solar panel industry, controlling more than 80% of the global solar panel supply chain. In addition to serving the export market, China is using large quantities of these solar panels domestically. The U.S. government-imposed tariffs on solar panel imports under both the Obama and Trump administrations, which spurred investment in domestic panel production. American manufacturer First Solar, Inc. (www.firstsolar.com) has a $680 million panel factory in Ohio. The plant is First Solar’s third solar panel plant in Ohio and has an annual capacity of 3.3 gigawatts (enough to power approximately 570,000 homes). In July 2025, the firm completed its $1.1 billion plant in Louisiana. The facility has capacity of 3.5 gigawatts and commercial shipments are expected in the first half of 2026.

Hanwha Solutions Corp., a subsidiary of South Korea’s Hanwha Group, plans to invest billions of dollars in creating a solar supply chain in the U.S. Qcells, another unit of Hanwha Solutions, is building solar component manufacturing plants in Dalton and Cartersville, Georgia, with a goal of 8.4 gigawatts of production by the end of 2026.

Texas is seeing remarkable growth in solar power generation, as well as other renewable energy sources. Between 2012 and 2022, the state saw approximately 44,000 megawatts of new renewable energy and storage capacity. BloombergNEF forecasts as much as 16,000 megawatts of additional solar power installations in Texas by 2026. However, the firm expected a decline in new annual solar installations due to the One Big Beautiful Bill Act.

Other nations, particularly India, plan to reduce their reliance on China for both completed solar panels and the necessary raw ingredients for their manufacture. India plans very aggressive expansion in panel manufacturing. Meanwhile, India is imposing substantial tariffs on Chinese-made panels. It is likely that the EU will also increase domestic panel manufacturing substantially.

At one time, 40+ U.S. states offered a generous version of a credit system called net metering, which pays commercial and residential customers for unused renewable energy that consumers or businesses sell back to utilities. This is primarily for rooftop installations of solar panels, so the customer can be as small as a single-family home, or as large as a shopping mall. If the property owner doesn’t need all of the solar power that is being generated on-site at any time, then that excess power can be sold back to the electric grid or electric utility. This has historically been at very generous prices, so net metering has been one of the key drivers of new solar installations.

However, many states are reining in their net metering allowances, as some observers believe these property owners are gaining unfair advantage, while many electric utilities claim that they are being forced to overpay for the power—thus driving up the total electric bill of all customers who do not happen to own solar panels. (That is, forcing all other electric customers to subsidize solar panel owners.) While net metering is often remaining in place, state legislatures are, in many cases, cutting the rates that utilities must pay to buy the excess power.

In May 2018, California became the first U.S. state to require solar panels on all new homes. Starting in 2020, residential buildings of up to three stories, including single family homes and condominiums, must be equipped with solar panels. California had so much installed solar power by 2025 that its electric grid was not always able to absorb and carry the available electricity. Residential installation growth may plateau or decline as the financial incentives have declined. By 2025, California obtained more than half of its electricity from renewables such as solar.

Europe has been quick to install rooftop systems due to generous government subsidies (however, some governments have cut those subsidies as part of recent austerity programs). Germany leads the world in rooftop installations. However, this renewable energy is driving total energy costs significantly higher. The German government’s subsidies for wind and solar power were cut, resulting in skyrocketing electric power prices for consumers.

Germany wound down all of its nuclear power plants as of 2023. However, traditional coal- and gas-fired power plants are still required in large numbers, particularly since neither wind nor solar can be counted on for full time output. Likewise, only traditional power plants can be called on to fill surges in need during peak periods of demand. The entire world is attempting to learn from Germany's grand experiment. Meanwhile, German consumers are suffering higher prices and Germany's carbon output has not decreased to the extent expected. The country is investing in what may become one of the world’s first nuclear fusion plants, which may be completed by 2040.

In the UK, solar capacity has skyrocketed. In 2010, capacity was under 100 megawatts. By late 2025, the UK had more than 21 gigawatts of solar capacity, according to Carbon Brief.

Internet Research Tip: Solar Power

To find out more about solar power and the Solar America Initiative, visit the U.S. DOE, SunShot Initiative at

www.energy.gov/eere/solar/sunshot-initiative.

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