President Donald Trump’s administration has voiced support for an “all the above” approach to energy policy in the United States.
So far, the administration has made a whirlwind of actions to boost oil and natural gas, and make cuts to incentives for clean energy resources. While the administration has injected momentum into fossil fuels and made some heavy blows to the adoption of EVs, wind power and energy efficiency, solar sits somewhere in the middle.
Under an executive order called “Unleashing American Energy,” the administration loosened restrictions around drilling and the exploration of rare earth minerals.
It also sought to end the “electric vehicle mandate” by terminating state emissions waivers that function to limit sales of gasoline-powered automobiles and by considering the elimination of “unfair subsidies and other ill-conceived government-imposed market distortions” that favor EVs over other technologies. There is no federal mandate for electric vehicle adoption in the United States.
The executive order also called for lowered appliance energy efficiency standards, citing consumer choice and market competition as motivations for this action.
In another executive action, Trump ordered a pause on offshore wind energy lease sales in federal waters as well as pauses on approvals, permits, and loans for both offshore and onshore wind.
Solar strength
Solar energy appears to be neither the apple of Trump’s eye, nor the target of his crackdowns. Regardless of administration, it has been growing for decades. Under Trump’s first term, the industry grew 128%, according to the Solar Energy Industries Association (SEIA).
Solar is now the most dominant source of new electricity generation added to the grid in the United States. According to the Energy Information Administration (EIA), over 64% of new capacity added to the grid through three quarters in 2024 was solar, followed by natural gas.
“Solar, now a $60 billion industry, is adding more new capacity to the U.S. grid than any other fuel source amid the largest increase in electricity demand since World War II,” said Abigail Ross Hopper, president and chief executive officer, SEIA.
(Read: “The solar industry’s top 10 priorities for Trump”)
Globally, clean energy investments are expected to surpass fossil fuels investments for the first time in 2025, according to S&P Global. S&P said investment in renewable power generation, green hydrogen, and carbon capture and storage will reach $670 billion in 2025, marking the first time these investments outpace projected upstream oil and gas spending.
“Solar PV is expected to represent half of all cleantech investments and two-thirds of installed megawatts,” said Edurne Zoco, executive director, Clean Energy Technology, S&P Global Commodity Insights.
Cloudy solar
Despite the optimism for solar as a core of the energy mix headed forward, there are several emergent risks in the second Trump term.
The administration withdrew from the Paris Agreement, a legally binding international treaty on addressing climate change. Combined with loosened restrictions on fossil fuels production, this action could shake up the comparative valuation between fossil fuels and solar energy, causing banks and lenders to reconsider investment in the energy transition.
Furthermore, there is a great deal of uncertainty around the Inflation Reduction Act (IRA) of 2022, the nation’s largest-ever climate and energy spending package.
The “Unleashing American Energy” executive action included an immediate halt to grants, loans, and other financial mechanisms within the IRA and the Infrastructure Investment and Jobs Act. Anticipating this action, the Biden Administration released tens of billions in loans over the last couple of months, including $23 billion to utilities, and experts say these funds are legally committed and highly unlikely to be revoked. This halt on new loan and grant funding will likely slow industry growth some.
Law firm Baker Tilly said it “remains unclear” whether the pause covers all prospective funding, such as direct pay provisions under the IRA, or if it applies solely to grants, loans and contracts administered at the federal level.
Another ongoing risk to the solar industry broadly is the application of tariffs. It remains unclear what goods will be tariffed and at what rate. The United States has a long bipartisan history of assessing tariffs on solar imports.
Tariffs are generally expected to raise the cost of goods, placing another hurdle in front of the solar industry as it competes with other energy sources. One potential benefit of tariffs is creating a more level playing field for U.S. solar manufacturers to compete with low-cost global suppliers.
Perhaps the most serious risk to the industry is the potential repeal of the Investment Tax Credit (ITC) within the IRA. Solar and energy storage projects of all sizes are offered a tax credit for 30% of the installed system cost. Bonus adders are made available for projects using U.S.-made components or located in low-income communities or communities economically affected by the energy transition.
Uncertainty over the fate of these tax credits has cast a cloud over the industry, dampening forecasts and slowing investment. Industry analysts have suggested that an outright termination of the ITC is unlikely, but that phasing it out sometime over the next two years, rather than in the mid-2030s, has some political will behind it. Roth Capital Partners said that ITC cuts may occur as part of the administration’s budget reconciliation bill, which would take place sometime in Q4, 2025.
Until then, the clouds of uncertainty may continue to slow solar investment for some time. However, as a technology that now delivers a levelized cost of electricity (LCOE) 56% less expensive than the weighted average fossil fuel LCOE, solar now has a market foothold that may be too strong to be upended by political turmoil.
