Solar Energy Forecast for 2025: Trends, Predictions & Growth Insights

The year 2024 was a transformative year for the solar energy sector. With advancements in technology, increased demand for electricity, and cost reductions due to government policies, many homeowners and business owners have transitioned from fossil fuels to solar energy!

While 2024 was a year of growth in the solar industry in the US, what changes can homeowners and business owners expect in 2025? In this article, we will discuss the solar energy forecast for 2025 and key predictions for its growth, technological advancements, and role in meeting climate goals.

The reliance on solar energy saw significant growth in 2024. According to the Federal Energy Regulatory Commission ( FERC ), compared to the previous year, solar energy production capacity increased by 88% in the first nine months of 2024 reaching 18.6 gigawatts (GW) , making it the only primary source of generation to record capacity growth.

The US Energy Information Administration believes that the share of the U.S. electric power sector utilizing solar energy will probably increase up to 6% by the end of 2024 and the total generating capacity in the solar sector is expected to add around 131 GW. This indicates a notable growth in power generation shifting from fossil fuels to clean energy trends for not just the US but global energy markets.

Now that we have discussed the solar energy sector performance in 2024, let's look into the expected changes in 2025!

Due to increased global electricity demand, the need for generating more power will increase significantly in 2025 and in the coming years as well. Specifically discussing solar energy in 2025, there are a few predictions that can be made. Let's discuss them in detail:

It is believed that by the end of 2025, the power demand growth of solar energy will be the leading source of new electricity generation in the US. According to the Energy Information Administration ( EIA ), the new solar capacity in the US has grown approximately by 36 GW, reaching a total of 131 GW in 2024 and is expecting an increase in electricity demand by 3%, and the solar sector will reach a total generating capacity of 174 GW .

Solar technology is evolving rapidly, and innovation is driving the growth of this sector. Today, we have more efficient and cost-effective solar panels that are being installed worldwide. In line with this growth trend, it is expected that there will be further advancements in solar technology in 2025.

Some of these advancements include:

Solar capacity is expected to grow due to modular designs and streamlined permitting processes. These advancements will help in faster solar energy deployment, mainly at utility-scale levels, where solar capacity is estimated to increase twice that of wind by 2025.

New developments in silicon, perovskite, and tandem solar cells will produce higher energy efficiency and lower production costs. The main purpose of these innovations is to improve energy yield, making solar more competitive and scalable.

Advanced solar cells will support continuous renewable energy supply with the help of dual-use applications, such as:

Tech companies are increasingly moving towards Renewable Energy Certificate ( REC ) purchases. A REC is a market-based instrument that signifies the ownership of the environmental, social, and other non-energy attributes associated with renewable electricity generation. RECs are issued for every megawatt-hour (MWh) of electricity produced and delivered to the grid from a renewable source like- solar and wind energy.

This approach is gaining traction among businesses and organizations aiming to meet sustainability goals while ensuring cost-effective energy solutions.

Solar energy systems are being paired with advanced energy storage technologies so that the system has a 24/7 power supply. For example, iron-air batteries can store energy for days, while green hydrogen systems can store and release solar power as needed. These hybrid setups also help to stabilize the power grid, even when sunlight is unavailable, making solar energy more dependable for large-scale use.

The cost of renewable energy, particularly solar, went down due to several factors like technological advancements, increased competition, and supportive policies. Overall, electricity prices by utility companies are expected to increase in 2025 due to rising power demand, making 2025 the perfect time to go solar!

Incentives and state programs have made it more affordable for households and businesses to switch to solar energy by reducing upfront costs and helping in long-term savings through energy efficiency. However, there is potential for changes in federal policy under a new administration and the 119th Congress which can impact the pace of solar deployment.

Let's discuss the impact of government policies and anticipated changes later in the article.

Solar energy integration is key to achieving a sustainable energy future. The growth of solar power in 2025 will be supported by the integration of solar with other renewable and conventional energy sources, such as wind, natural gas, and hydroelectricity.

Many homeowners, government bodies, and utility companies are taking necessary steps to reduce their dependence on fossil fuels by integrating solar energy with other energy sources. Let's look into few these integrations:

Long-duration energy storage (LDES) technologies are being developed to store solar energy for a long period of time. This makes renewable energy sources like solar more reliable by storing energy for when these sources are not actively generating power, for example- during the rainy season.

Microgrids play an important role in enhancing grid stability and allowing the incorporation of distributed energy resources, especially in abandoned or underutilized areas like brownfield sites. Microgrids are controllable electrical grid that works independently from the main grid and they also provide backups during grid outages.

Homeowners with solar panels can not only power their homes but also charge their electric vehicles directly from renewable energy, reducing reliance on the grid. When homeowners charge their EVs with solar energy, it completely removes the need for electricity from the grid which makes EV ownership more affordable. Solar energy system reduces the total cost of ownership but also align with sustainable living goals.

Government policies play a critical role in shaping the growth trajectory for any industry. In the past decade, there has been significant progress towards creating an environment conducive for clean energy, and solar power has been at the forefront of this movement. Let's discuss the main policies and programs for solar systems and energy storage systems, in detail:

The federal government offers credit against your tax liability that reduces 30% of the total cost of installing a solar system for US homeowners. The Inflation Reduction Act (IRA) is a US law that provides incentives for adopting clean energy like solar power to make solar energy more accessible. While no changes are expected in 2025, the tax credit for solar projects might see a phase-out over the next few years.

State-level solar policies help reduce the upfront costs and provide long-term savings on electricity bills. Net metering is one of them where the homeowner can earn tax credits by sending excess energy back to the grid. Several states across the US like New Hampshire, Illinois, and Virginia are assessing the updates from the net metering and incentive program 2025 legislative sessions .

In 2024, the solar sector experienced a significant global energy transition, growth, and advancements, and it will continue to be a leading source of renewable energy. While there are some challenges need to be addressed, such as policy changes and grid stability constraints, 2025 presents a nice opportunity to go solar!

With no major changes in policies or regulations, it’s a good time for homeowners and business owners to take advantage of existing incentives, tax credits, and programs designed to make solar energy more affordable and accessible and the key driver of global renewable energy capacity additions!