U.S. solar will pass wind in 2025 and leave coal in the dust soon after

Solar energy is driving U.S. electric generation capacity growth, accounting for nearly 75% (16 GW) of the 21.5 GW added through July 2025, amid a projected 16% increase in electricity demand over the next five years. While natural gas remains the largest source, FERC forecasts that solar will add 92.6 GW by July 2028, pushing its total installed capacity to approximately 250 GW and surpassing coal's projected 173 GW by 44% as numerous coal plants are retired, indicating a significant transformation of the national energy mix.

Analysis

Solar energy is unequivocally leading the expansion of U.S. electric generation capacity, contributing 16 GW, or nearly 75%, of the 21.5 GW added through July 2025. This robust growth is supported by a significant macroeconomic tailwind, as Grid Strategies LLC forecasts a 16% increase in electricity demand over the next five years following a prolonged period of flat demand. While natural gas remains the dominant source of total installed capacity at 567 GW (42%), its role in new additions (2.2 GW) is dwarfed by solar, even as its own new capacity nearly doubled year-over-year. The most critical data for forward-looking analysis comes from FERC's projections through July 2028, which forecast a major shift in the nation's energy mix. Coal capacity is projected to shrink by 25 GW to 173 GW with no new additions, while solar is expected to add 92.6 GW of "high probability" capacity. This trajectory will position solar's total installed capacity at approximately 250 GW, surpassing coal by 44% and establishing it as the second-largest source of electricity capacity in the U.S. Recent project activations by entities like Duke Energy (DUK) and Avangrid (AGR) substantiate this rapid deployment on the ground.

Key Decisions for Investors

• The data confirms a strong secular growth trend for solar energy, driven by both market share gains in new capacity and a projected 16% increase in overall electricity demand, warranting a bullish outlook on solar developers, equipment manufacturers, and utilities with aggressive renewable deployment strategies.
• Investors should scrutinize the generation mix of utility holdings, as the structural decline of coal, evidenced by 25 GW of projected retirements by 2028, poses a significant risk to companies with heavy exposure, while leaders in solar development like Duke Energy and Avangrid are better positioned for growth.