The U.S. residential solar industry is cratering after President Donald Trump eliminated a key tax credit for homeowners to install solar panels last year — and it's dragging down residential battery additions, according to a new BloombergNEF report.

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The U.S. is expected to add 4.1 gigawatts of residential solar in 2026, down 15% from 2025, according to a BloombergNEF projection. That would mark the lowest level of new residential solar installations in five years.

"The market is not expected to recover to the record levels of 2023 anytime in the next decade," the report states.

The main reason for the anticipated drop in home solar is the sunsetting of a 30% tax break for homeowners late last year under the One Big Beautiful Bill, explains BloombergNEF's June 15 report. This has made solar systems more expensive for consumers. Meanwhile, tariffs and other factors have raised costs for solar equipment too.

Solar companies are feeling the pressure. According to the new report and company filings, Sunrun Inc is expecting a 25% drop in U.S. residential solar additions in 2026 compared to 2025, while Enphase Energy Inc, SolarEdge, and SunPower Corp are expecting declines of 22%, 20% and 15%, respectively. Back in April, Freedom Forever filed for bankruptcy, citing the elimination of the federal tax credit.

While most of the country is experiencing this drop, two states are bucking the trend: California, a longtime solar leader, and Florida, which passed a new pro-solar law last year. BloombergNEF projects Florida's residential solar additions will hit 710 megawatts in 2026, a 62% increase over last year. California's installations are also forecast to grow 17% in 2026. Both states are also leading on solar permit applications.

The national solar crunch is having a knock-on effect on home batteries, which are highly dependent on solar installations. About 1.4 gigawatts of home storage is expected to go online this year, down 26% from 2025.

But even as total home battery installations are down, the combination of residential solar with batteries is on the rise. As of the first three months of 2026, some 40% of new residential solar systems have a battery attached, BloombergNEF found, up from an average of 35% last year.

"Battery storage is the future of home solar," said Cosmo van Steenis, a BloombergNEF analyst and co-author of the new report. "Batteries can lay up stores of solar power in the daytime and release them at night."