This week, Aaron Nichols sits down with Zoë Gaston, Principal Analyst for Distributed Solar at Wood Mackenzie, to dig into her data. Zoë shares what her team is seeing in 2025 installation trends, how the repeal of the Inflation Reduction Act RA is shaping the market, and why third-party ownership (TPO) is likely to surge.
What You’ll Learn in This Episode:
* How Q1 and Q2 2025 residential solar installs compare to last year.
* Why third-party ownership (leasing and PPAs) are expected to grow rapidly starting in 2026.
* How great installers differentiate themselves through trust, service, and diversification.
Quotes from the Episode:
“Our modeling showed installs could be as much as 40% lower in a low case scenario. But the industry will adapt.” – Zoë Gaston
“The best installers are the ones who care about their customers and can come back later with storage or other products.” – Zoë Gaston
Transcript:
Aaron Nichols:Hello, everyone and welcome back to This Week in Solar. I'm your host, Aaron Nichols, the Research and Policy Specialist here at Exact Solar in Newtown, Pennsylvania.
And today’s episode is very special because it’s literally brought to you by solar. I’m out on the road—my girlfriend and I are doing a working road trip—and this wouldn’t be possible without an off-grid solar setup, a battery bank, and Starlink. So I’m very grateful for that.
You may hear some nature noises; that’s because I’m recording outside today. Now, today’s guest is someone I’ve had nothing but positive interactions with and I’m happy to have gotten to know in person. She’s an analyst at Wood Mackenzie and covers distributed solar. It’s just been a delight to interact with you every time. It’s Zoë Gaston, ladies and gentlemen.
Yeah, thanks for having me. Welcome to the show. I’d love if you could give listeners a broad overview of who Wood Mackenzie is and what you all do in this space.
Zoë Gaston:Definitely. Wood Mackenzie is a global research and consulting firm, but my team and focus is the U.S. distributed solar research team.
Primarily, we publish research reports on the state of the U.S. solar market—how installations have trended. We put out forecasts for where we expect the market to go over the next five to ten years. We talk to many folks across the industry to gather data and trends—really, what’s going on right now.
Aaron Nichols:Okay, and what’s on most people’s minds lately has been the effective repeal of the Inflation Reduction Act. Since I work for a distributed solar company and you cover distributed solar nationwide, I’m curious what you’re seeing and how you think distributed solar companies can prepare.
Zoë Gaston:We’re finalizing our Q2 installation data now. We have Q1 2025 data—Q1 is typically the lowest quarter for residential solar due to seasonality, but this Q1 was particularly low: down about 10–15% versus Q1 2024, and Q1 2024 was already low.
We don’t have all of Q2 yet, but we do have Arizona, and installs there were down about 20% quarter-over-quarter in Q2. I’m anticipating Q2 will remain pretty low overall.
The first half of 2025 was strange: continued high interest rates impacting demand; bankruptcies of two major financing players, Mosaic and Sunnova; and uncertainty about whether tax credits would go away. That uncertainty made the customer sales pitch tougher.
Now that the bill has been signed into law, I’m hearing from installers that sales are ticking up—there’s urgency for homeowners with 25D to qualify before year-end. So I expect an uptick in Q3 and a strong Q4.
Aaron Nichols:Yeah, on our end the lead volume and sales spike has been amazing. Incentives going away is, in the short term, the best imaginable marketing for solar—though long term, we’ll see. We’re booking into January now, so a nice backlog is forming, but we are navigating a new world.
What are you all preparing for at Wood Mackenzie? Many said we needed a reasonable phase-down, not a cliff. Some call this a cliff—residential loses incentives after decades, and commercial phases out faster. What are you preparing for?
Zoë Gaston:In Q2 (around May), after the House bill came out, we updated our forecast modeling. We built a low case assuming a worst-case scenario: after 2025, no residential systems qualify for 25D or Section 48 ITC. Under that scenario, we expect a sizable drop-off in 2026–2027.
Comparing 2025 to 2029 capacity, that low case could be ~40% lower than our base case (which assumes no ITC changes), and it also assumes more pessimistic interest and retail rate outcomes. Think of that as the floor.
There is upside: based on the bill’s language, third-party-owned (TPO) systems can continue to qualify for the ITC after 2025. That’s up in the air pending the executive order and Treasury guidance. If retail rates rise and interest rates ease, that also adds upside.
Assuming TPO qualifies, I expect a 25D-driven uptick in 2025, a contraction in 2026 once 25D is gone, and then a significant rise in TPO market share starting in 2026 that could last several years. I’m hearing many loan-/cash-only installers are shifting to TPO. I also expect more diversification—storage, small commercial, service, HVAC, roofing—anything to offset the slowdown.
Aaron Nichols:As someone looking at the market in depth, what do great installers do that others don’t? What helps them stand the test of time and weather downturns?
Zoë Gaston:From the installers I speak with, smaller local companies often build real relationships and trust with customers and can return later to offer storage or other products. Companies that genuinely care about customer outcomes—saving money, clear communication—stand out.
Aaron Nichols:What are you optimistic about going forward? Personally, I think telling Americans they can’t have something they used to have creates a backlash—some will go solar out of defiance, which oddly makes me optimistic.
Zoë Gaston:I think the industry will adapt. Even installers who don’t plan to offer TPO are looking to cut costs. Some say they’ll “eat” that 30% next year to offer customers IRA-like pricing—how they’ll do it remains to be seen, but I’m hearing consistent determination to keep solar affordable.
This could weed out bad actors who can’t operate in the new environment. Longer term, costs can come down, and the sector can emerge stronger.
Aaron Nichols:I’m fired up. It was fun entering solar during strong incentives, but I’m a contrarian—it’s energizing to have a fight. I’m excited for the next few years and to have my job be active defiance instead of the accepted norm.
Zoë Gaston:I started this role in 2022 right when the IRA passed—so a lot has changed. It’s been a tough few years, but residential solar will come out the other side.
Aaron Nichols:It’s been going a long time. When I interviewed Nico Johnson for the first episode (airing in a couple weeks), I said I’ve been blown away by how close-knit the long-timers are—same conferences, best friends, godparents to each other’s kids. That’ll be us in ten years. I’m excited to work with these people.
As younger folks now receiving the baton, what can we do to carry it forward?
Zoë Gaston:In my role, I aim to be objective: track trends, explain what’s happening, and offer informed expectations. My goal is to keep providing data that helps the industry understand conditions, adapt, and move forward.
Aaron Nichols:Sounds good. I’ll be over here fighting. Last one—a moonshot question I’m asking everyone. At my grandma’s 80th birthday, I realized she was born into a world without what we now call renewable energy. Ten years after the Rural Electrification Act, nine years before the first PV cell (1954). Carter put solar on the White House in 1979. Within her lifetime we went from nothing to affordable renewables.
If we’re extrapolating—and we’ll both be gone—what does renewable energy look like in 80 years?
Zoë Gaston:Great question. Technology could be far more advanced—maybe entirely different. Panels will be much more efficient. Maybe truly solar-powered cars. Maybe we can project solar power onto buildings instead of installing it. Full electrification. We’ll see.
Aaron Nichols:Thank you so much for doing this, Zoë. It’s been fun to talk to friends for work, and I’m grateful you made the time. Where do you like to be found?
Zoë Gaston:On LinkedIn—search my name, Zoë Gaston. I periodically post updates about our research.
Aaron Nichols:I realize I said your name wrong at the beginning—I’ll try to edit that out. Thanks again for making the time. You can find Zoë’s work on LinkedIn—she posts educational charts from her analyst work and is worth following.
Zoë Gaston:Thanks for having me.
Aaron Nichols:That’s This Week in Solar. See you next week.
