The solar and energy storage markets in the U.S. have entered a phase of uncertainty in the first quarter (Q1) of 2026, as several policy developments began directly influencing pricing, procurement strategies, and supply chains, according to Anza’s Q1 2026 Quarterly Pricing, Foreign Entity of Concern (FEOC) Compliance, and Domestic Content Report.

Solar Module Prices Remain Flat

Solar module prices remained largely flat at around $0.285/W. Imported modules held steady at $0.265/W, reflecting continued global overcapacity, but domestically linked products saw sharp price increases.

Mono PERC modules recorded a 20% surge to $0.33/W, overtaking TOPCon pricing for the first time. This shift is attributed to strong demand for domestically manufactured modules ahead of the July 3, 2026, Investment Tax Credit (ITC) Safe Harbor deadline.

In contrast, TOPCon prices remained stable at $0.28/W, while HJT modules hovered near $0.385/W.

In November, the market looked normal, with Mono PERC at $0.275/W, TOPCon at $0.285/W, and HJT at $0.39/W. By February, it changed dramatically, with PERC at $0.33/W (+20%), TOPCon at $0.28/W (-2%), and HJT at $0.385/W (-2%).

Domestic Manufacturing

The report highlights a widening pricing gap between domestic and international supply chains. U.S.-made solar cells reached $0.49/W, while modules assembled domestically using imported cells rose to $0.325/W. Fully imported modules, however, remained flat.

This divergence reflects growing demand for domestic content to qualify for incentives, even as supply remains constrained.

Anza expects further expansion in domestic manufacturing, with three additional U.S. cell suppliers likely to come online by end-2026, taking the total to 15.

Policy Actions Increase Market Uncertainty

The quarter was marked by multiple policy developments, including a Section 337 investigation into TOPCon imports.

On March 26, 2026, the U.S. International Trade Commission voted to institute an investigation into imports of TOPCon cells and modules. Petitioner First Solar has alleged patent infringement by multiple manufacturers and seeks a general exclusion order and cease-and-desist orders.

Another decision that affected the market was the imposition of high anti-dumping and countervailing duties on imports from India, Indonesia, and Laos, with preliminary rates ranging from 80% to 143%.

Also, increased enforcement under the Uyghur Forced Labor Prevention Act and evolving Section 301 actions could further disrupt supply chains and increase costs.

FEOC Clarity Expands Supply

A key regulatory development in Q1 2026 was the updated Internal Revenue Service (IRS) guidance on FEOC compliance.

In Q1, the updated IRS guidance clarified core FEOC requirements. It confirmed that taxpayers can rely on existing Safe Harbor tables and supplier certifications, and that compliance at the solar cell level alone is sufficient to qualify as FEOC-compliant. While these changes broaden eligible options, tax equity investors are likely to continue applying more stringent verification standards in practice.

Currently, 78 out of 230 solar modules tracked by Anza met FEOC requirements.

Energy Storage

The downward trend in the battery energy storage system pricing observed in the latter half of 2025 carried into Q1 2026.

Prices for utility-scale systems continued to decline significantly, while distributed generation (DG)-scale systems have largely stabilized, indicating a floor price in that segment.

In the energy storage segment, utility-scale battery systems continued to decline, with AC wrap prices falling to around $177-178/kWh and self-integrated systems to $145/kWh, marking declines of up to 20% from 2025 peaks.

However, DG-scale systems stabilized, with prices near $203/kWh, suggesting a potential floor price as suppliers prioritize larger projects.

Storage Faces Policy Risks

Despite recent cost reductions, the storage sector faces mounting policy risks. Tariffs on active anode materials could add $8-$15/kWh, while China’s reduction in VAT export rebates is expected to increase costs by 3% in 2026 and by a further 3% in 2027.

Potential restrictions on Chinese inverters and new Section 232 investigations into batteries and grid equipment could further tighten supply and increase prices.

FEOC compliance in storage remains more challenging than in solar, with only 40% of products classified as low risk and over half as high risk.

At the same time, domestic manufacturing is scaling rapidly, with the number of U.S.-based battery cell suppliers expected to more than double from 6 in 2026 to 13 by 2027, improving long-term supply prospects.

Outlook for 2026

Key developments to watch in 2026 include the Section 232 polysilicon decision and the outcome of the TOPCon investigation, both of which could reshape pricing dynamics.

With the Safe Harbor deadline approaching, buyers are accelerating procurement decisions, particularly for domestic sourcing, while facing an uncertain future amid a changing tariff regime, compliance requirements, and supply chain risks.

The U.S. solar industry added 43.2 GW of new capacity in 2025, a 14% decline from 2024, according to the U.S. Solar Market Insight 2025 Year in Review report released by Wood Mackenzie and the Solar Energy Industries Association. Even with the annual decline, solar remained the dominant source of new electricity generation, accounting for 54% of all new electricity-generating capacity added to the U.S. grid during the year.