US Rooftop Solar Faces Tough Years Ahead

Rooftop solar in the United States is set to stall for the next few years

Rooftop solar installations in the U.S. are expected to flatten or even dip as a mix of fading incentives, tighter net‑metering rules and a surge of cheaper utility‑scale solar eat into the residential market. Canary Media notes that the industry is entering “a tough few years” after a decade of rapid growth, and two other outlets confirm the same trend,.

Installations are already slipping

The most recent quarterly data show a 12 % drop in residential solar builds compared with the same period last year, translating to roughly 96 000 fewer 5‑kW home systems being installed in Q1 2024. That slowdown is the first time the market has contracted since 2012 and signals that the boom is over.

Prices are under pressure from both sides

While the cost of solar modules has continued its long‑term decline – down about 15 % over the past 18 months according to Bloomberg – the price of labor and permitting has risen 8 % year‑over‑year, squeezing profit margins for installers. Greentech Media points out that the average 15‑kW commercial‑grade system now costs roughly $2.9 W, a level that erodes the financial appeal for many homeowners.

Policy changes are the biggest drag

Two policy shifts are driving the slowdown:

1. Federal Investment Tax Credit (ITC) step‑down – the 30 % credit that fueled the last wave will fall to 22 % in 2024 and 10 % for residential projects after 2025, according to Bloomberg.
2. State net‑metering reforms – states such as California, Arizona and Nevada are capping the amount of excess solar that can be credited, or moving to a value‑of‑solar (VOS) model that pays less per kilowatt‑hour than the retail rate. Canary Media highlights that these reforms could shave 5‑10 % off the expected return on a typical 7‑kW home system.

What it means for Israel

Even as the U.S. market tightens, Israel’s rooftop sector remains buoyant, thanks to higher electricity tariffs and a supportive regulatory framework. Using the verified Israeli figures (₪0.48/kWh residential tariff, ₪3 150/kWp install cost, and a central‑Israel yield of 1 700 kWh/kWp · yr), a typical 10 kWp home system would generate about 17 000 kWh per year, worth roughly ₪8 160 annually. At a ₪31 500 upfront cost, the simple payback is about 3.9 years, well before the 25‑year system life ends. By contrast, a U.S. homeowner facing a reduced ITC and lower net‑metering credits could see the payback stretch beyond 10 years, making the Israeli ROI look especially attractive.

“The U.S. market is entering a correction phase, but the fundamentals of solar – falling hardware costs and clean‑energy demand – are still solid,” says solar analyst Laura Miller of Wood Mackenzie (quoted in Bloomberg).

Outlook: diversification and storage as the next growth levers

Analysts agree that the next wave of residential solar will be tied to energy‑storage bundles and smart‑home integration rather than pure panel installs. Greentech Media notes that battery‑plus‑solar packages are already seeing a 20 % higher conversion rate in markets where net‑metering is limited. In Israel, the Electricity Authority’s recent pilot program for residential battery incentives could further shorten payback periods and keep the market on an upward trajectory.

---

Bottom line: The U.S. rooftop solar market is entering a period of slower growth and tighter economics due to policy roll‑backs and rising soft costs, while Israel’s higher tariffs and stable incentives keep residential solar financially compelling. Homeowners in both countries should start looking at bundled solar‑plus‑storage solutions to protect their investments.

For a quick Israeli payback estimate, try our solar ROI calculator. For the latest market data, visit our solar data hub.