Core Insights - The U.S. solar industry is experiencing strong growth, with installations reaching 11.7 GWdc in Q3 2025, a 20% year-over-year increase, despite recent federal policy changes creating near-term uncertainty [1][3][4] - Solar accounted for 58% of all new electricity-generating capacity added to the U.S. grid through Q3 2025, solidifying its position as the dominant source of new capacity [2] - The industry faces challenges from rising tariffs and regulatory changes, which are increasing costs and complicating project planning, yet long-term demand remains resilient with a projected 246 GWdc of installations from 2025 to 2030 [4][5] Industry Overview - The solar industry is divided into two main segments: companies that design and produce solar modules and those that install solar power systems [2] - The industry includes manufacturers of inverters, which convert solar power into electricity for the grid [2] Trends Impacting the Industry - Utilities, businesses, and households are increasingly adopting solar power, particularly systems with battery storage, to enhance energy resilience and mitigate rising electricity costs [3] - Project delays have decreased, with only 20% of planned solar capacity facing delays in Q3 2025, down from 25% a year ago [3] - The U.S. Energy Information Administration (EIA) anticipates an additional 32 GW of solar capacity to come online between October 2025 and September 2026 [3] Regulatory Environment - The One Big Beautiful Bill Act (OBBBA) has introduced new federal tax credit limitations and Foreign Entity of Concern requirements, creating uncertainty in permitting and supply chains [4] - The industry is adapting to a fluid policy landscape, with developers facing challenges in planning and procurement due to ongoing regulatory changes [4] Economic Pressures - U.S. tariffs on imported goods are increasing manufacturing costs for solar companies, compounding existing raw material shortages [5] - Despite a 12% average drop in module prices, commercial system pricing rose 9% in Q3 2025 due to increased balance-of-electrical-system and racking costs [5][6] - Labor costs rose 15% year-over-year, and EPC overhead and margins increased nearly 40%, reflecting heightened project risk [6] Market Performance - The solar industry has outperformed both its sector and the S&P 500, with a collective stock increase of 17.7% over the past year compared to 4.7% for the Oils-Energy sector and 16.3% for the S&P 500 [9] - The industry currently trades at a trailing 12-month EV/EBITDA of 6.22X, significantly lower than the S&P 500's 18.74X [12] Notable Companies - **FTC Solar**: Focuses on solar tracker systems and has a Zacks Rank 2 (Buy), with a projected sales increase of 108.6% for 2025 [15][16] - **Canadian Solar**: A leading manufacturer of solar PV modules, with a Zacks Rank 2 and a projected EPS increase of 25.2% for Q4 2025 [18][19] - **Tigo Energy**: Provides intelligent solar solutions, with a Zacks Rank 3 (Hold) and a projected sales increase of 91.9% for 2025 [22][23] - **Sunrun**: Develops residential solar systems, benefiting from a storage-first strategy, with a Zacks Rank 3 and a projected sales increase of 20.7% for 2025 [26][27]

Industry Overview - The U.S. solar industry experienced a 24% year-over-year decline in installations during Q2 2025, with all segments except commercial solar shrinking due to unfavorable federal policies and trade challenges [1][3] - Solar photovoltaic (PV) accounted for 56% of the new electricity-generating capacity added to the U.S. grid in the first half of 2025, maintaining its status as the dominant form of new generating capacity [2] Trends Impacting the Industry - The U.S. Energy Information Administration (EIA) projects that total U.S. electricity generation will grow by 2.3% in 2025, with solar power contributing the largest share of this increase [3] - Federal policies, particularly the One Big Beautiful Bill Act (OBBBA), have cut federal tax credits and introduced new requirements that may adversely affect solar manufacturing capacity and investment [4] - Tariffs imposed in 2025 have increased component and operational costs, with module costs rising by 13% year over year due to the AD/CVD case on solar cells and modules [5][6] Financial Performance - The solar industry has underperformed compared to the Oils-Energy sector and the S&P 500, with a collective loss of 22.5% over the past year, while the Oils-Energy sector rose by 4.5% and the S&P 500 surged by 18.8% [9] - The industry is currently trading at a trailing 12-month EV/EBITDA of 5.52X, compared to the S&P 500's 18.22X and the sector's 5.07X [12] Notable Companies - **Sunrun Inc.**: Announced the pricing of a securitization of leases and power purchase agreements, raising over $1.5 billion in financing in Q3 2025, supporting profitable growth [15][16] - **Shoals Technologies Group**: Announced the groundbreaking of the Maryvale Solar and Energy Storage Project in Australia, which will deliver 243 MW of solar capacity and 172 MW of battery storage, enhancing its international presence [20][21] - **Tigo Energy Inc.**: Completed compliance testing for its Tigo EI Residential solution in Slovakia, enhancing its market position and expected to improve sales by 91.9% in 2025 [25][26]