US solar could lose 60GW by 2030 due to executive order

The US solar market faces a potential 60GW reduction in planned capacity over the next five years, driven by looming stricter interpretations of "start of construction" rules for Investment Tax Credit (ITC) and Production Tax Credit (PTC) safe harbor provisions, as mandated by a recent executive order. This policy uncertainty, coupled with anticipated increases in solar module prices due to escalating tariffs—including potential Section 232 on polysilicon and existing AD/CVD duties—and challenges with Foreign Entity of Concern (FEOC) restrictions impacting domestic manufacturing tax credits, threatens to significantly curtail US solar deployment and elevate project costs for developers.

Analysis

The US solar sector faces a significant dual threat of regulatory tightening and cost inflation, which could jeopardize up to 60GW of planned capacity through 2030. According to Clean Energy Associates (CEA), a primary risk stems from an impending redefinition of the "start of construction" rules required for projects to secure safe harbor provisions for the critical 45E Investment Tax Credit (ITC) and 45Y Production Tax Credit (PTC). An executive order has directed the Treasury to implement stricter rules, potentially shifting the requirement from a minimal 5% project spend to a far more ambiguous and challenging "substantial portion" threshold. This policy uncertainty, with new guidance due imminently, is poised to curtail a significant number of projects racing to meet the July 2026 construction start deadline. Compounding this regulatory headwind is a forecasted increase in solar module prices. The market faces a confluence of new and existing tariffs, including potential "punitive" Section 232 tariffs on polysilicon—which Wood Mackenzie identifies as the industry's "biggest supply vulnerability"—and ongoing AD/CVD duties on cells from key Southeast Asian nations. Furthermore, challenges for domestic manufacturers in navigating Foreign Entity of Concern (FEOC) restrictions for the 45X tax credit are expected to result in higher costs being passed on to end buyers, further pressuring project economics.

Key Decisions for Investors

• Investors should immediately heighten scrutiny on US solar developers, as the upcoming Treasury guidance on 'start of construction' rules represents a major downside catalyst that could render a significant portion of project pipelines unviable.
• Re-evaluate cost and margin assumptions for US solar assets, as the combined impact of potential Section 232 tariffs and the likely pass-through of lost manufacturing credits points to significant module price inflation, eroding project returns.
• Consider reducing exposure to pure-play US solar developers and module importers until there is definitive policy clarity, as the current environment of high regulatory uncertainty and escalating supply chain costs presents a materially negative risk profile for the sector.