The U.S. solar industry is in a period of transition. Now that the residential investment tax credit has expired and the 48E tax credit for large-scale projects is coming to an end, installations are expected to decline across all markets. Research groups say the U.S. solar industry will never again reach the 50 GW annual installation peak seen in 2024.
To predict how the United States will fare in an era without stimulus, one might look at the past decade in Britain. That country changed its solar incentive programs around 2016, and installation habits have fallen sharply – from a high of 4 GW in 2015 to just 268 MW in 2018. Britain has taken years to rebuild its solar efforts, and residential installations are just now surpassing the 2015 high. While the two markets differ in many ways – Britain reached a total installed GW of 20 GW by 2025, while the US manages twice that amount annually – the abrupt removal of incentives affected real people and jobs in Britain, and the United States could face a similar disruption.
The solar world is a different place than it was a decade ago, but there’s no guarantee that the United States will make it through the next few years completely unscathed. Here’s how the UK solar market got through its own troubling stimulus transition period.
British market history
The UK government offered a feed-in-tariff (FIT) to the residential and small commercial markets from 2010, encouraging energy suppliers to pay homes and businesses to generate and export renewable energy. The FIT was available for projects smaller than 5 MW and had two forms: a generation tariff and an export tariff.
The generation rate applied to electricity produced by a solar system, regardless of whether the home or business exported it. If you had a solar system, you got paid for the power it produced. The generation rate was originally set around 40 pence/kWh. The export tariff was a separate payment for all electricity sent to the grid and was initially around 3 p/kWh. The FIT payments, guaranteed for 10 to 25 years, contributed to a large increase in solar installations in early 2010, and residents and businesses across the UK were able to quickly recoup the costs of installing solar with these favorable incentives.
British solar market. Credit: Solar Energy Portal
Finally, in 2016, wagering limits were introduced that limited the size of installations that could receive the highest rates, and adjusted rates resulted in lower payouts. The FIT program stopped accepting applications in March 2019, with the government arguing that it had served its purpose of growing domestic renewable energy.
In the utility market, Britain offered renewable obligation certificates (ROCs). First introduced in 2002, ROCs were issued for each megawatt-hour of electricity produced. Project owners could sell these certificates, in addition to the electricity generated, for an additional income stream. Energy suppliers/utilities could purchase ROCs to demonstrate compliance with procurement requirements. Britain announced the closure of the ROC program in 2015 and accepted the last new applicants in 2017, but some certificates will remain until they are completely abolished in 2037.
Uncertainty about future incentives caused the UK solar market to shrink severely in 2016. Solar energy UK (then known as Solar Trade Association) said a third of the industry’s 35,000 solar jobs were lost in 2016, and 40% of solar companies planned to exit the solar industry completely. The 2016 Brexit referendum and 2020 exit from the European Union also contributed to a turbulent economic period in Britain
The residential solar energy market stagnated between 2017 and 2020, barely exceeding the annual installed 85 MW. It was clear that a revamped program would be needed to revive the UK solar industry.
Recovery in Britain
In 2020, Britain introduced the new Smart Export Guarantee (SEG) for residential and small commercial solar systems. A simple generation tariff was no longer on the table, but an adjusted export tariff has been included in the SEG. The program requires energy suppliers to pay system owners for the power they export to the grid, although no generation rate is specified. Energy suppliers realized that higher payouts could attract new customers, so they adjusted the SEG to multiple time-of-use (TOU) rates. Households can now earn more incentives than the old FIT program if they successfully navigate the TOU export options.
The British standards body MCS monitors the small-scale market and has determined that 2025… record year for UK solar in terms of number of installations. It is estimated that Britain will have ended the year with a total of 235,000 solar installations, surpassing the previous annual record of 203,125 installations set in 2011. Paying residential solar customers for the power they produce has unsurprisingly revived the market.
On the utility side, the ROC program was replaced by the Contracts for Difference (CfD) scheme, which offers a fixed-rate contract that is essentially a power purchase agreement (PPA). This protects project owners against volatile electricity prices and guarantees a fixed price for electricity generation. CfD was first introduced to large-scale energy projects in 2014, but the government mainly favored offshore wind energy and started excluding solar energy from the auction rounds until 2021.
Gareth Simkins, senior communications adviser for advocacy group Solar Energy UK, said the UK market has grown strongly since 2022 after incentive programs stabilized in all markets.
“We are now in build-out mode, with gigawatts of projects being supported by the CfD program over the coming years,” he said.
Lessons learned
Multinational investment manager Quinbrook Infrastructure Partners recently reached a milestone in Britain, with the completion of the country’s largest solar energy project. This feat didn’t seem possible a decade ago, says Keith Gains, Quinbrook’s managing director and UK regional leader. But the CfD scheme, together with the government-backed Nationally Significant Infrastructure Project process, brought the 373 MW Cleve Hill solar farm project online last summer.
Quinbrook’s 373 MW Cleve Hill Solar Park in Great Britain
“The UK market is the size of ERCOT in Texas. Previously, all building permits were done at a local level. A population of a few hundred thousand could decide whether a project goes ahead or not,” he said. “The government has decided that if we want to meet our net zero targets and we need these major projects, we need to take the decision-making away from local people and bring it to the national level. Cleve Hill was the first renewable energy project to be authorized under the Nationally Significant Infrastructure Project programme.”
That national support has been crucial in getting the UK solar market back on its feet.
“There has to be a way to reduce the risk around actually delivering the projects,” Gains said. “A project the size of Cleve Hill – hundreds of megawatts – will cost many millions of pounds to go through the development pipeline. If you don’t think you can actually deliver that project economically, you’re not going to put the first pound to work. Having that government approval process gives you a lot more confidence that you’re being treated equally and that you know the rules of the game you’re playing. The Contract for Difference gives you the price certainty, the backstop, that if energy prices were to fall, you can stay at that price level.”
Quinbrook’s 1 GW Gemini Solar + Storage project in Nevada
During the UK market slowdown, Quinbrook shifted its investments to complementary areas in the energy transition, such as flexible generation. The group expanded its presence in the United States and also financed its largest project here, the nearly 1 GW Gemini Solar + Storage project in Nevada. According to Gains, Quinbrook has no plans to focus on other energy areas when faced with an unstimulated U.S. solar market. At least on the utility side, there is enough demand for new electricity to keep everyone busy.
“When the ROCs ended, everything came to a standstill [in the U.K.]. That doesn’t happen [in the United States]. The growth level of demand from data centers exceeds everyone’s expectations. There is also a lot of societal pressure on companies to decarbonize, and that is pushing companies to want to buy energy from renewable sources,” he said. “There just needs to be a change in mindset. You can’t just sit there and rely on the tax credits. There is a way to make these projects economical. These companies need power, and they will pay for that power. It’s not all doom and gloom in America. It is still the land of opportunity.”
