Solar Market Outlook H2 2026: Panel Prices, Supply Chain, and Demand Trends

Published July 29, 2026 — PES Supply Market Analysis

The U.S. solar market enters the second half of 2026 at a crossroads. Installation volumes declined sharply in the first quarter, yet system economics are improving as module prices fall and equipment availability stabilizes. The forces shaping the market — Foreign Entity of Concern (FEOC) compliance, anti-dumping duties, polysilicon oversupply, and the post-tax-credit transition — are pulling in different directions, creating both challenges and opportunities for installers, EPCs, and distributors.

This analysis draws on the latest data from SEIA, Wood Mackenzie, BloombergNEF, InfoLink Consulting, and procurement platform Anza to give you a clear picture of where the market stands and where it is heading. At PES Supply, we monitor these trends daily to keep our 50,000+ SKUs from 169 authorized brands aligned with market realities.

Q1 2026 Installation Data: A Sharp Decline

SEIA's Q2 2026 Solar Market Insight Report (covering Q1 data) reveals that the U.S. installed 7.8 GWdc of new solar capacity in Q1 2026 — a 27% decline from Q1 2025 and a 42% drop from Q4 2025 ([Renewability.net](https://renewability.net/us-solar-installations-fall-27-in-q1-2026-as-tax-credit-cliff-approaches/)). This is not a demand problem. Solar remained the leading source of new U.S. generating capacity for a fifth straight year in 2025, adding 43 GW. The decline is driven by policy and permitting headwinds.

Segment Breakdown

Segment	Q1 2026 Capacity	Year-over-Year Change	Quarter-over-Quarter Change
Utility-scale	5.9 GWdc	-34%	-45%
Residential	1,179 MWdc	+6%	-15%
Commercial	Modest decline	Varies by region	Down

Utility-scale, the segment that has carried the industry's growth for years, bore the brunt of the decline. Interconnection queue timelines have improved only slightly, permitting bottlenecks persist, and the industry is adjusting to what SEIA bluntly calls a "post-tax-credit world" following the expiration of the Section 25D residential credit on December 31, 2025.

Residential was the lone bright spot, up 6% year-over-year, driven by improving system economics and rising retail electricity prices. Distributed solar segments are expected to decline further through 2026 before residential growth resumes in 2027, when third-party ownership project tax credit eligibility and rising retail rates are expected to provide a floor.

Module Pricing: A Two-Track Market

The most striking feature of the 2026 solar market is the divergence between global and U.S. module prices. Globally, module prices have plunged to historic lows. Tier-1 mono TOPCon panels trade FOB China at $0.085 to $0.095 per watt, down 38% from the 2022 peak, according to BloombergNEF ([Solar Now](https://now.solar/2026/07/02/solar-pv-at-scale-from-low-cost-modules-to-bankable-projects-nerdbot/)). The Chinese Module Marker (CMM), OPIS's benchmark for TOPCon modules below 645W FOB China, fell to $0.109/W as of July 28, 2026 ([pv magazine](https://www.pv-magazine.com/2026/07/31/chinese-topcon-module-prices-fall-as-high-efficiency-supply-adds-pressure/)).

But U.S. buyers operate in a fundamentally different pricing environment. Data released by supply chain platform Anza on July 9, 2026 shows that median pricing for U.S.-assembled solar modules stabilized at $0.30 per watt in Q2 2026 ([pv magazine USA](https://pv-magazine-usa.com/2026/07/10/u-s-assembled-module-prices-steady-at-0-30-w/)).

U.S. Module Pricing Detail (Q2 2026)

Metric	Value
Median price	$0.30/W
Interquartile range	$0.280/W – $0.325/W
Modules tracked	55 modules from 19 suppliers
Q1 2026 median	$0.28/W
Price movement (Mar–Apr 2026)	-$0.015/W dip
Price movement (May 2026)	+$0.005/W recovery
June–July trend	Held flat

The price floor for U.S.-assembled modules is being driven by enforcement of the FEOC framework and a new tariff petition targeting South Korean manufacturing. The divergence between global and U.S. pricing reflects what industry analysts now call the "provenance premium" — the additional cost of politically aligned supply chains ([EnkiAI](https://enkiai.com/policy-and-regulations/solar-tariffs-us-china/)).

Polysilicon Supply: Record Oversupply

The upstream supply chain tells a story of massive oversupply. Polysilicon inventories currently stand at approximately 520,000 to 570,000 metric tons, enough latent supply for 300 gigawatts of modules that have not yet been ordered ([EnergyTrend](https://www.energytrend.com/pricequotes/20260717-51764.html), [Solar Now](https://now.solar/2026/07/02/solar-pv-at-scale-from-low-cost-modules-to-bankable-projects-nerdbot/)).

This oversupply has cascaded through the entire supply chain:

• Polysilicon: Inventory above 520,000 MT; spot market activity sluggish with granular polysilicon trading at approximately RMB 31/kg. Downstream ingot manufacturers are focused on consuming existing inventory rather than purchasing.
• Wafers: Industry-wide inventory above 28 GW. Tier-1 manufacturers are attempting to hold prices while tier-2 and tier-3 players offer discounts under liquidity pressure.
• Cells: Inventory at approximately 12 days of supply. Mainstream transaction prices have fallen to RMB 0.26–0.265/W ([EnergyTrend](https://www.energytrend.com/pricequotes/20260717-51764.html)).
• Modules: China's module output in July estimated at 37–38 GW, with global production plans at approximately 48–49 GW — creating a production-recovery versus weak-orders contradiction.

Despite leading producers holding frequent meetings to address "involution" (excessive internal competition), market competition continues to intensify. Polysilicon prices are expected to remain under pressure with little sign of a meaningful market reversal in the near term.

Global Production and Installation Forecasts

A report from the China Photovoltaic Industry Association (CPIA) showed global PV module manufacturing capacity reached 1,430.2 GW in 2025, up 3.0% year-over-year, while module output fell 4.4% to 693.6 GW. China produced 574.5 GW of modules, down 8.4%, with domestic manufacturing capacity declining 5.8% to 1,089.4 GW.

SolarPower Europe expects global solar installations to contract by approximately 8% in 2026, primarily due to a projected slowdown in China following changes in its domestic solar market. However, annual global installations are still projected to reach approximately 864 GW by 2030.

Regional Price Divergence

Market	Module Price	Trend
China TOPCon (average)	RMB 0.72/W	Down 1.1%
China ground-mount TOPCon	RMB 0.70/W	Down 1.4%
China-made TOPCon for Europe	$0.121/W FOB	Down 3.5%
India-assembled TOPCon FOB	$0.145/W	Unchanged
Europe full-black modules	€0.129/Wp	Premium holding
Europe back-contact modules	€0.135/Wp	Premium holding

Source: InfoLink weekly spot prices, July 15, 2026; PV Tech and sun.store pv.index, July 10, 2026.

The data confirms there is no longer one global solar-module price direction. Commodity and bifacial TOPCon products remain buyer-friendly, while premium residential formats continue to protect margins in Europe.

U.S. Supply Chain Composition

Anza's data on 55 U.S.-assembled modules reveals a complex and internationally dependent supply chain ([pv magazine USA](https://pv-magazine-usa.com/2026/07/10/u-s-assembled-module-prices-steady-at-0-30-w/)):

Component	Origin Breakdown
Polysilicon	Malaysia: 24 modules; U.S.: 15 modules; China: 13 modules; other: 3 modules
Cells	10 different countries; Kenya: 12 modules; Philippines: 11 modules; others distributed

This composition illustrates the challenge of FEOC compliance. Even U.S.-assembled modules may not automatically qualify for the domestic content bonus if their polysilicon or cell components trace back to covered foreign entities. Installers must verify the full supply chain provenance of each module, not just the final assembly location.

System Pricing Trends

Despite the installation slowdown, system economics are moving in the right direction. Wood Mackenzie/SEIA data show:

• Residential system pricing: Down 7% year-over-year
• Utility-scale pricing: Down 3% for both fixed-tilt and single-axis tracking configurations
• Distributed generation module prices: Fell more than 20% annually
• Utility-scale module prices: Fell 8% annually
• Commercial system pricing: Up 4% year-over-year (the outlier)

The residential and utility-scale price declines were driven largely by the repeal of IEEPA tariffs that had ranged from 20–50% on sourcing from countries like Indonesia and Laos. Commercial pricing's upward trend reflects supply chain pressures specific to that segment, including permitting complexity and smaller project economies of scale.

PPA Price Impact

Solar Power Purchase Agreement (PPA) prices surged to $64.49/MWh in Q1 2026, reflecting the "provenance premium" that politically aligned supply chains impose on project costs ([EnkiAI](https://enkiai.com/policy-and-regulations/solar-tariffs-us-china/)). A Chinese-made solar module with a base cost of $0.15/W now faces tariffs and compliance costs that push its final landed price higher than its base manufacturing cost. Developers face a stark choice: absorb tariffs as high as 50% on Chinese modules, raising the landed cost of a $0.15/W module to $0.23/W, or pay a higher base price of $0.25/W for domestically produced alternatives.

IRA Incentive Impact on Demand

The Inflation Reduction Act's incentive structure continues to shape demand, but in fundamentally altered ways after the OBBBA's passage. The 30% residential Investment Tax Credit under Section 25D expired for systems placed in service after December 31, 2025. This has shifted the residential market toward third-party ownership models (leases and PPAs) that can still access the Section 48E commercial ITC.

Key Incentive Deadlines Affecting H2 2026 Demand

Deadline	Significance
July 4, 2026	Safe harbor deadline to begin construction and preserve 30% ITC eligibility under Section 48E
December 31, 2026	Treasury due to issue final safe harbor tables for domestic content calculations
January 1, 2027	FEOC threshold increases to 45% for PV, 60% for battery
December 31, 2027	Final deadline to energize projects for nonprofit safe harbor qualification

The July 4, 2026 safe harbor deadline created a rush of project starts in the first half of the year as developers sought to lock in ITC eligibility. Projects that missed this deadline face a more uncertain incentive landscape, which is expected to moderate utility-scale demand in H2 2026.

Demand Forecast for H2 2026

Wood Mackenzie frames 2026 as contingent on three open fronts that will determine the second-half trajectory:

1. Judicial resolution of IEEPA tariff authority: A Supreme Court ruling narrowing IEEPA tariff authority would restore procurement clarity and could unlock delayed utility-scale projects.
2. Relief from elevated DOI review processes: A judicial check on the Department of Interior's elevated review process for federal land projects would accelerate the utility-scale pipeline.
3. Residential recovery timing: Third-party ownership models and rising retail electricity prices are expected to stabilize residential demand, with growth resuming in 2027.

Distributed solar segments are expected to decline further through 2026 before residential growth resumes in 2027. However, the improving system economics — particularly falling module prices for distributed generation — may cushion the decline and support a faster recovery than currently forecast.

Procurement Strategies for H2 2026

1. Diversify Your Module Sources

With the South Korea AD/CVD petition pending and ongoing supply chain restructuring, avoid over-reliance on any single country of origin. PES Supply offers modules from multiple manufacturers with diverse supply chains, helping you maintain FEOC compliance while managing cost.

2. Lock In Pricing with Short Validity Windows

In a volatile pricing environment, cap quote validity at 30 days and add escalation clauses. Module prices may move significantly between quote and delivery, particularly if new tariff determinations are issued.

3. Prioritize FEOC-Compliant Inventory

As FEOC thresholds tighten (increasing to 45% for PV in 2027), the pool of compliant modules will shrink. Secure FEOC-compliant inventory now for projects planned in late 2026 and early 2027. Request compliance documentation at the purchase order stage.

4. Plan Delivery Timelines

With global supply chains in flux, plan for 7-10 business days delivery on stocked components. Order early, especially for FEOC-compliant modules where the compliant supply pool is smaller and demand from safe harbor projects may strain availability.

What This Means for Installers

The H2 2026 market rewards installers who can navigate complexity. Module prices are at historic lows globally, but U.S. buyers face a provenance premium that keeps effective costs elevated. The residential market is transitioning from homeowner-owned systems to third-party ownership models, while utility-scale demand hinges on judicial and regulatory outcomes.

Key takeaways for your business:

• System economics are improving despite installation declines — lower module prices and repealed IEEPA tariffs are helping.
• FEOC compliance is now a make-or-break procurement criterion — verify supply chain provenance before ordering.
• The safe harbor deadline has passed — new projects face a more uncertain incentive landscape.
• Diversify suppliers and cap quote validity to manage pricing volatility.
• Plan for 7-10 business days delivery and order early for compliant inventory.

PES Supply is committed to helping you navigate this complex market. With 50,000+ SKUs from 169 authorized brands, we offer the breadth and depth you need to source compliant equipment across solar panels, inverters, energy storage, racking and mounting, and balance of system categories. Our team tracks tariff developments, FEOC compliance, and pricing trends so you can focus on what you do best — installing solar.