Three Solar Stocks to Watch as Renewable Energy Surges in 2025

The U.S. solar energy market experienced significant momentum throughout 2025, with solar power ultimately supplying over half of all new electricity generation capacity added to the grid. Yet the path to growth proved uneven. The industry faced headwinds including tariff-driven cost increases, policy uncertainties, and shifting federal incentive structures. Despite these obstacles, forward-looking investors focused on renewable energy opportunities continue to identify compelling opportunities within the sector. Three companies that merit consideration for portfolios seeking solar stocks exposure are Sunrun Inc. (RUN), Shoals Technologies Group (SHLS), and Tigo Energy Inc. (TYGO).

Solar Power Dominates New U.S. Electricity Generation

Throughout 2025, the renewable energy landscape underwent a notable transformation. According to data published by the Solar Energy Industries Association (SEIA) in September 2025, solar photovoltaic capacity accounted for 56% of all new electricity-generating capacity connected to the U.S. grid during the first half of that year. This milestone underscores solar’s position as the nation’s leading source of new power generation.

The second quarter of 2025 initially appeared challenging, with installations declining 24% year-over-year to 7.5 GWdc. However, developers accelerated completion efforts during the latter half of 2025 to meet government-imposed deadlines, resulting in an improved trajectory. The U.S. Energy Information Administration (EIA) validated this growth story, confirming that solar power projects accounted for the largest share of new generating capacity additions in 2025, with total electricity generation growth reaching 2.3% for the year.

Industry Challenges: Policy Shifts and Rising Operational Costs

The regulatory environment created notable uncertainty for solar stocks investors. The One Big Beautiful Bill Act (OBBBA), officially enacted in July 2025, substantially reduced federal tax credits previously available under the Inflation Reduction Act (IRA). The legislation also introduced Foreign Entities of Concern (FEOC) requirements, which Wood Mackenzie estimated could impact approximately half of operational solar manufacturing capacity over subsequent quarters.

Beyond policy changes, tariff escalation presented a tangible cost burden. Following the implementation of 10% baseline tariffs in April 2025, solar system pricing surged across the industry. Module costs climbed 13% year-over-year in the distributed generation segment, while residential system prices increased 2% and commercial system prices jumped 10%. Supporting operational expenses—including permitting, logistics, and labor—rose approximately 30% year-over-year, directly pressuring profit margins for solar stocks across the sector.

Why Sunrun, Shoals Technologies, and Tigo Energy Lead the Solar Sector

Sunrun Inc. (RUN), headquartered in San Francisco, develops and manages residential solar energy systems. The company demonstrated strong capital markets access in 2025, completing its fifth securitization of power purchase agreements during the year alone, raising $1.5 billion in non-recourse debt financing during Q3. This financial flexibility positions the company to capitalize on growing residential solar demand. Consensus estimates project 11.2% revenue growth for 2025, with earnings estimates trending upward over recent months. The stock carries a Zacks Rank of #1 (Strong Buy).

Shoals Technologies Group (SHLS), based in Portland, Tennessee, manufactures critical solar infrastructure components including combiner boxes, disconnect boxes, and monitoring solutions. The company expanded its international footprint in 2025, participating in Australia’s Maryvale Solar and Energy Storage Project—a 243 MW solar and 172 MW battery storage installation near Wellington, New South Wales. This 243 MW project exemplifies Shoals’ role in supporting Australia’s target of 82% renewable electricity by 2030. Long-term earnings growth projections reach 24%, with 2025 sales consensus estimates reflecting 15.3% year-over-year improvement. The company carries a Zacks Rank of #2 (Buy).

Tigo Energy Inc. (TYGO), located in Campbell, California, develops intelligent solar inverter and energy storage management systems. In September 2025, the company secured compliance certification for its three-phase residential inverter solution with Slovak regulatory authorities, validating adherence to European grid standards and positioning the company for broader adoption across European residential solar markets. The consensus estimate for 2025 sales indicates 91.9% growth, with profitability metrics improving over recent months. The stock carries a Zacks Rank of #2.

Valuation Metrics Support the Investment Case

The solar energy sector currently trades at an attractive valuation relative to historical averages. On a trailing twelve-month EV/EBITDA basis, the industry commands a multiple of 5.52X, significantly below the S&P 500’s 18.22X and comparable to the broader energy sector’s 5.07X. Over the past five years, the solar industry has traded as high as 50.91X and as low as 4.03X, with a median of 24.09X. Current valuations near five-year lows reflect both the near-term industry pressures and the substantial upside potential as tariff and policy headwinds stabilize.

The Case for Solar Stocks in Your Portfolio

The 2025 data confirms that solar energy’s structural growth trajectory remains intact despite short-term challenges. Three consistent themes support renewed confidence in solar stocks going forward: first, regulatory projections confirm solar’s outsized role in America’s electricity generation expansion; second, leading companies have demonstrated capital and operational resilience; and third, valuation levels offer attractive entry points for long-term renewable energy investors. Sunrun, Shoals Technologies, and Tigo Energy represent three differentiated plays within this secular growth story—offering exposure across residential installation, solar infrastructure equipment, and inverter technology, respectively.