As a sweeping Republican-led tax bill moves through Congress and now the Senate, the rooftop solar industry is faced with slashing and abrupt ends to key federal incentives. The already-passed House version would eliminate tax credits that have fueled two decades of growth in solar, leaving companies, homeowners and developers scrambling before a potential year-end deadline. While the Senate is considering a slightly more flexible approach, industry leaders warn that the rollback could hurt a sector that employs hundreds of thousands, destabilize financing models like solar leases, as well as slow the clean energy transition just as it gains national momentum.
Why Rooftop Solar Could Crash Under the G.O.P. Tax Bill – The New York Times
The big domestic policy bill passed by House Republicans last month would, by the end of this year, eliminate tax credits for homeowners and solar leasing companies that have fueled the popularity of rooftop solar. If it becomes law, it would lead to an immediate plunge in installations, analysts and companies say.
The Senate is now writing its version of the domestic policy bill, and solar executives have descended on Washington to plead for a more gradual wind-down of the energy credits. They note that the solar industry employs roughly 300,000 workers and that rooftop systems can help homeowners cut their electric bills.
If Congress slashed support for renewable energy, experts said companies would continue investing in large-scale solar arrays, since even without subsidies those plants are often one of the cheapest ways to generate additional electrons. Rooftop solar, which is costlier and requires more labor, faces greater risks.
What Happens to Solar Leases If Tax Credits Disappear? – Heatmap News
If the bill were to become law, the tax credits for new installations would terminate abruptly at the end of this year, giving companies no time to adjust to the new market reality. Rooftop solar as it exists today will cease to make financial sense in many places, and the customer base could run dry. Building owners with existing leases or power purchase agreements for rooftop solar may be wondering what will happen if the company they signed with goes under.
The biggest risk if the solar company ceases to exist is that maintenance will fall through the cracks, Roger Horowitz, the director of Go Solar Programs at the nonprofit Solar United Neighbors, told me. There may no longer be anyone monitoring your installation. Unless you’re actively keeping an eye on it, such as through a phone app, you might not notice if an inverter goes down. And then if something like that does happen, or if a bad storm causes damage, the leaseholders, aka the bank, may be unresponsive.
Senate GOP bill spares nuclear and geothermal energy while hammering wind and solar – TechCrunch
Senate Republicans are moving to swiftly end residential solar tax credits, giving people just 180 days after the bill is signed to claim them. Solar leasing companies would become ineligible for any credits, knocking out another leg from under the residential solar market.
Incentives for commercial wind and solar would see a longer timeline, though not nearly as generous as those under the IRA, which extend through 2032. The full credit would be available to projects that begin within six months of the bill’s signing. After that, they receive 60% of the credit if they commence construction in 2026 and 20% if they do so in 2027. The tax credit disappears after that.
Clean energy tax credits change with new Trump law – Microsoft News
Under the new provisions, only those clean energy projects that meet two critical conditions will qualify for tax exemptions. Firstly, construction must commence within 60 days of the law’s enactment. Secondly, these projects must be operational by the end of 2028. This accelerated timeline represents a more rapid phase-out of credits compared to earlier versions of the bill, which had proposed a gradual end starting in 2029.
Some Republican fiscal conservatives, often referred to as “fiscal hawks,” had advocated for an even swifter elimination of these credits. The bill also includes a clause that blocks projects receiving assistance from certain foreign countries, adding another layer of complexity to the clean energy sector.
US Senate panel advances bill to phase out clean energy tax credits – pv magazine
First, it cuts the 48E Investment Tax Credit for solar and wind energy projects, which covers 30% of installed system costs. The credit is reduced to 60% of its value by the end of 2026, 20% of its value by the end of 2027, and all projects placed in service by 2028 are ineligible for the credit.
All other qualified technologies, including energy storage, are phased down to 75% value for projects to place in service in 2034, 50% in 2035, and 0% after 2035.
In a notably anti-consumer and anti-small business move, the 25D residential solar tax credit is cut much earlier, 180 days after the bill is enacted into law.
Tech Industry Fights to Save Clean-Energy Tax Credits – WSJ
The House bill would require solar, wind and other projects to begin construction within 60 days of the measure’s enactment to receive tax credits. It would also require the projects to come online by 2028, setting a hard cutoff for any projects placed in service after that year. Under current law, the tax credits phase out over four years, starting in either 2032 or when the U.S. power sector’s greenhouse-gas emissions fall to a quarter of their 2022 levels—whichever comes later.
Extending the tax credits will likely be a tough battle with little room for error given pushback from fiscal hawks urging deeper spending reductions in President Trump’s “big, beautiful bill.” The bill also extends expiring tax cuts, lowers Medicaid costs and provides money for border security and national defense.
Want to Claim the Solar Tax Credit? Get Installing Now | WIRED – Wired
Without the tax credits, solar systems might still make financial sense in places that get a lot of sun or have high electricity prices, or both, but the payback period will likely grow. For other people, the math may no longer work at all.
The House move isn’t the only headwind the solar industry is facing. Some states, most notably California, for example, have lowered the amount that homeowners can earn by selling power to the grid, making solar less lucrative. Even before Republicans took control of Congress and the White House, companies were starting to let employees go. More layoffs have ensued.
Some Republicans have acknowledged the role that energy tax credits play in the economy, and their districts. Twenty-one House members of the party signed a letter to Ways and Means chairman Jason Smith expressing concern about “disruptive changes to our nation’s energy tax structure.” Four Republican senators also wrote to majority leader John Thune, a Republican from South Dakota, urging “a targeted, pragmatic approach” to any changes.
Republican budget bill will cost thousands of clean energy jobs, millions in investment, advocates say | TribLIVE.com – Triblive
The proposed Republican budget bill that eliminates several clean energy-related tax credits will cost about 100,000 Pennsylvanians their jobs, clean energy advocates said Wednesday at a rally in Pittsburgh.
“Why would Congress want to shut us down. The federal legislation has created more than 100,000 family-sustaining jobs in Pennsylvania,” said Sharon Pillar, executive director of the Pennsylvania Solar Center, a Pittsburgh-based non-profit.
The budget reconciliation bill that passed in the Republican-controlled House last month and is in the Senate for a vote, would eliminate about 20 clean energy tax credits that were part of the Inflation Reduction Act of 2022 passed under President Biden. Those tax credits, which were to expire in 2032 under that legislation, included ones for solar power projects, clean vehicles, home energy and advanced energy projects, clean electricity investment and production, energy efficient commercial buildings and advanced manufacturing, according to the Internal Revenue Service.
If you’ve been waiting to go solar, now is probably the time to take the plunge before government incentives potentially go poof.
That being said, even without the 30% residential Investment Tax Credit (ITC), installing solar panels is a “smart financial move” according to Emily Walker, director of content and insights at EnergySage, a leading solar company.
Despite its benefits, “chances are high,” in Hadlow’s estimation, that the credit will be eliminated before the new year. That creates a lot of urgency because only solar systems that are fully installed and up and running by then will be eligible for the 30% tax credit.
Senate takes more flexible approach to GOP’s green tax credit rollback -The Hill
The Senate text appears to eliminate the most stringent provision in the House bill, deleting a measure that would have required climate-friendly energy sources to start construction within 60 days of the bill’s enactment to qualify for the credits at all.
Instead, things such as solar panels and wind farms would need to begin construction this year in order to receive the full credit amount.
Projects that begin construction in 2026 would get 60 percent of the credit, while projects that begin construction in 2027 would receive 20 percent. Projects constructed in 2028 or later would not be eligible for the credit.
Conclusion
While solar tax credits have gained financial popularity in recent years, the proposed House bill would cause many to reevaluate the economic feasibility of solar investments. Depending on the Senate’s decision, clean energy projects are at risk if construction does not commence quickly. With little chance to extend the clean energy tax credits, the clean energy sector is pressed for time to claim tax credits while they still can. The outcome could set a lasting precedent for clean energy in the United States.
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***News roundup guest post from FischTank PR interns Abigail Collins and Laura Gruener***
