Solar and battery storage continue to account for the vast majority of new US power plant capacity under construction, a trend that persists even as federal clean-energy tax credits phase down, permitting freezes delay projects, and tariffs push up equipment costs. The durability of this buildout signals that market fundamentals – falling technology costs, corporate procurement targets, and state-level mandates – are now strong enough to sustain deployment without full federal policy support. For developers and grid planners, the critical question is no longer whether solar and storage will lead, but whether interconnection queues and supply-chain friction will let them come online fast enough to meet demand growth.
Solar and storage command the construction pipeline
Data from the Federal Energy Regulatory Commission and tracked by Canary Media’s Chart of the Week column show that solar and battery storage together represent the overwhelming share of capacity in active US power plant construction. Natural gas, once the default choice for new generation, has fallen to a distant third. Wind, while still significant in certain regions, has not matched the pace of solar-plus-storage additions in recent quarters. The source notes that this dominance persists despite a “tough time to build renewable energy in the US,” citing the phaseout of tax credits, a freeze on clean-energy permitting, and tariffs certain to raise solar costs.
The construction pipeline reflects decisions made 18 to 36 months ago, when financing closed and equipment orders were placed. Many projects now breaking ground secured interconnection agreements and power purchase agreements under the full Investment Tax Credit (ITC) and Production Tax Credit (PTC) regime established by the Inflation Reduction Act. The current policy headwinds – including the Trump administration’s moves to phase out those credits, freeze permitting, and impose tariffs on solar imports – will affect projects that have not yet reached financial close. That lag means the construction data visible today is a trailing indicator; the leading indicator is the pace of new financial closes, which has shown signs of slowing in early 2025.
Battery storage is increasingly co-located with solar, creating hybrid plants that capture the ITC for storage when paired with solar – a provision that has driven a surge in hybrid project development. Standalone storage projects, which only recently became eligible for the ITC on their own, are also rising but face steeper revenue uncertainty in markets without capacity payments. The source’s emphasis on “solar and storage” as a combined category reflects this structural shift: the two technologies are now developed, financed, and operated as a single asset class in much of the country.
Interconnection reform and supply-chain friction will determine actual deployment
The construction pipeline is necessary but not sufficient for actual capacity additions. The primary bottleneck has shifted from project economics to interconnection queue delays and transformer lead times. As of late 2024, the combined interconnection queues across US ISO/RTO territories held over 2,600 GW of proposed generation and storage – roughly twice the total existing US generating capacity. Solar and storage projects make up the bulk of that queue. FERC Order 2023, which mandates cluster studies and financial penalties for withdrawn projects, is beginning to clear stale entries, but the backlog means many projects in “active construction” today may still face 12 to 24 months of additional delay before commercial operation.
On the supply side, US module manufacturing capacity is expanding rapidly – First Solar, Qcells, and others have announced over 15 GW of new domestic nameplate capacity coming online between 2024 and 2026. However, the Trump administration’s tariffs on Southeast Asian solar imports (which supplied roughly 80% of US modules before the tariff pause) create a near-term gap. Domestic supply cannot fully replace imports until 2026 at the earliest. Module prices in the US currently trade at a 30% to 40% premium to global spot prices, according to industry analysts. That premium raises levelized cost of energy (LCOE) for projects procuring equipment today, potentially pushing some marginal projects out of the money.
Battery storage faces its own supply-chain constraints. Lithium iron phosphate (LFP) cell production is concentrated in China, and while US pack assembly is growing, cell-level domestic production remains minimal. The Inflation Reduction Act’s advanced manufacturing production credit (Section 45X) incentivizes domestic cell production, but the first large-scale US LFP cell factories (such as those planned by Ford/CATL and Our Next Energy) are not expected to reach volume production until 2027 or later. In the interim, storage developers are exposed to geopolitical risk and potential tariff escalation on battery imports.
That points to a divergence: projects that locked in equipment pricing and interconnection milestones before 2024 will likely complete on schedule and at competitive costs. Projects still in early development face a compounding risk stack – higher equipment costs, uncertain tax credit value, and queue uncertainty – that could thin the pipeline for 2027-2028 commercial operation dates.
Who this affects
- Utility resource planners: Integrated resource plans (IRPs) filed in 2025-2026 must model a scenario where solar-plus-storage dominates new builds but commercial operation dates slip by 12-24 months; plan for capacity accreditation rules that may de-rate storage duration as penetration increases.
- Solar and storage developers: Projects without executed EPC contracts and firm module/battery supply agreements by mid-2025 face margin compression from tariff-driven cost increases; prioritize projects in queues with cluster study results already issued.
- Grid operators (ISOs/RTOs): Interconnection reform implementation (FERC Order 2023 compliance filings due mid-2025) will determine whether the current construction pipeline translates to actual megawatts; monitor withdrawal rates after financial security deposits escalate.
- Corporate offtakers and RE100 buyers: Power purchase agreement (PPA) pricing for solar-plus-storage has risen 15-20% since 2023; long-term offtake contracts signed now should include price reopener clauses tied to tax credit resolution and tariff exclusions.
- Transmission developers: The geographic concentration of solar-plus-storage in high-resource, low-load areas (West Texas, Southwest, Southeast) creates a structural need for long-distance transmission; projects with permitting momentum (e.g., SunZia, TransWest) gain strategic value.
What to watch next
- FERC Order 2023 cluster study results across major ISOs (PJM, MISO, CAISO, ERCOT) through 2025: The pace of study completion and withdrawal rates will reveal how much of the 2,600 GW queue is viable.
- Treasury guidance on IRA tax credit phaseout mechanics and “placed in service” safe harbors: Clarity on whether projects that begin construction in 2025-2026 can still claim full ITC/PTC value will drive financial close decisions for the 2027-2028 vintage.
- US module manufacturing ramp vs. import tariff enforcement: Track quarterly domestic production data (EIA Form 860M) against import volumes; the crossover point where domestic supply meets demand will signal when module price premiums normalize.
- Capacity market rule changes in PJM and ISO-NE regarding storage duration and ELCC (Effective Load Carrying Capability) accreditation: These rules directly determine revenue certainty for the 4-hour and 8-hour storage projects dominating the pipeline.
Bottom line: Solar and storage have won the technology competition for new US power plant construction, but the next five years will be defined by whether the physical and regulatory infrastructure – interconnection, transmission, domestic manufacturing, and stable tax policy – can deliver projects at the pace the grid now requires.
Read the full report at Canary Media
Note: facts and figures attributed above to Energy News Network reflect that outlet's original reporting. Broader context, cross-sector connections, and forward-looking scenarios reflect independent analysis by our editorial team.
About this article: Drafted by Energy Ai with AI-assisted research and writing based on public reporting, then reviewed under our editorial process before publication.
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