The House of Representatives passed a budget bill with last-minute amendments early Thursday morning that could spell doom for residential solar and significantly hamper large-scale solar. Changes from the first budget bill to this one would impact all solar markets.
- Prohibits solar leasing companies like Sunrun from collecting the ITC (48E)
- Removes phase-outs for ITC (48E) and PTC (45Y)
- Projects must begin construction within 60 days of enactment AND be placed in service before December 31, 2028, to receive credits. Per Keith Martin at Norton Rose Fulbright, that puts the probable deadline to start construction in early October this year
- Start of construction is still satisfied by the two tests in this amended bill — either by physically starting the project or incurring 5% of the cost of materials for the project
- Moves up the date for FEOC compliance to December 31, 2025
- Restricts projects from collecting incentives if they involve any “material assistance” from a prohibited foreign entity if they start construction after December 31, 2025
The final bill includes the following elements first revealed in the first draft:
- Eliminates residential ITC (25D) after December 31, 2025
- Preserves full value of manufacturing tax credit (45X) through 2029 before phase-down through 2031
The residential solar ITC has been extended numerous times over the last few decades. When it was extended in 2015 through 2021, then-SEIA president and CEO Rhone Resch said:
“This historic vote brings the solar industry to the forefront of the conversation about American energy. The ITC extension makes America and its solar industry the world’s preeminent producer of clean and affordable energy.”
With still-high interest rates and solar panel tariffs already putting residential solar out of reach for many Americans, killing the 30% federal tax credit will no doubt hammer the country’s residential solar installers, many of which are small local businesses.
“If Congress does not change course, this legislation will upend an economic boom in this country that has delivered an historic American manufacturing renaissance, lower electric bills, hundreds of thousands of good-paying jobs, and tens of billions of dollars of investments primarily to states that voted for President Trump,” said SEIA president and CEO Abigail Ross Hopper.
“This unworkable legislation is willfully ignorant of the fact that deploying solar and storage is the only way the U.S. power grid can meet the demand of American consumers, businesses, and innovation. If this bill becomes law, America will effectively surrender the AI race to China and communities nationwide will face blackouts,” she continued.
Although the manufacturing tax credits weren’t further reduced in the final bill, the Solar Energy Manufacturers for America (SEMA) Coalition said limiting the credits as originally proposed amounts to handing the solar manufacturing keys back to China.
“Despite many reassurances that Members support domestic manufacturing, a vote for this bill was a vote to close U.S. factories and concede manufacturing jobs of the most important energy resource of the 21st century to China,” said SEMA Coalition Executive Director Michael Carr. “While we appreciate the endorsement of the Advanced Manufacturing Production Tax Credit by the House, this retroactive repeal — with many contracts in place for U.S.-made products through 2030 — of the incentives to purchase American-made solar components undermines existing commercial agreements. The result will push developers back to buying overly subsidized Chinese products evading our trade laws, while raising electricity costs for everyone. If this were to become law, it would be a boon to Chinese manufacturers and a tremendous step backward for American jobs, competitiveness in manufacturing and AI, economic security and energy security.”
The bill will now go to the Senate for deliberation.
UPDATED at 10:31 a.m. ET to state that projects must both be under construction within 60 days after President Trump signs the bill AND must then be placed in service by the end of 2028 to claim the ITC or PTC.
If you think that Solar energy is a scam then you don’t know how Solar works. The increase in local utility rates has increased so much over the last three years that most people who own their own home can’t even afford to keep the lights on. Now that Trump Has brought this bill to basically force Americans to be susceptible to these rate increases is absolutely criminal. But I’m pretty sure we already knew he was a criminal when we elected him. If you think for one second that this isn’t to benefit, Warren Buffett (Berkshire Hathaway) and all the other monopolizing utility companies that are ran by billion dollar firms then your nuts. I sell residential Solar and when people see that we can reduce their bills at a fixed rate they’re absolutely elated. I love what I do and it’s a shame that helping others isn’t what this country is about anymore.
Congress needs to understand domestic manufacturing for solar has grown over the past few years to a point where losing the solar market would be a blow to US manufacturing. Keeping the ITC for the next five years or so while continuing the incentive for using domestic manufacturers will not only drive more deployments but also will allow domestic manufacturers to continue to invest in capacities and capabilities.
There’s not enough USA module manufacturing to support utility scale projects. We have to source foreign content. The only credit we need is 100% dollar for dollar for USA content. We don’t need the PTC and ITC credits that you only get by putting restrictions on the subcontractors making them pay prevailing wages and implementing apprenticeship programs. These burdens the Biden administration put on the industry didn’t help one bit.
As a US-based manufacturer of solar panels, we possess the capacity to support large-scale utility projects, with the flexibility for swift expansion as demand grows. The primary challenge appears to be the current lack of connectivity among local solar manufacturers, which has hindered the development of a coordinated project timeline necessary for scaling up utility support. For those interested in exploring collaboration or requiring further information, please feel free to reach out to me directly. Together, we can strengthen our industry and enhance support for one another.
SolarT –
I think the purpose of the PTC & ITC credits are to create middle class jobs out of solar facility construction.
Prior to the PTC & ITC the workers building these facilities were making poverty level wages (less than $20/hour) with no benefits. The only people benefiting were the temp agencies acting as a middle man to find the cheap labor to give to the EPCs. It is actually shameful way for the industry to operate. Paying people next to nothing and abusing their bodies.
Unfortunately, this is a typical government “bait and switch” policy. We built and enhanced our solar system–adding cells and battery capacity (over time from off-grid savings). Now, it appears that politically motivated policies are attempting to cut our legs off from under us. I’ll survive but many others will lose faith in the American dream of independence and home ownership. Tom
The ITC and PTC need to be gone. Put a 10% tariff on all imported modules and a credit for made in the USA and that will realign everything to make projects pencil out. If they can install utility scale solar in the rest of the world without these credits, we don’t need them in the USA. Residential solar is a scam anyways in any state with sub 15 cent / kWh pricing.
Most of the our grid is out dated and is becoming more expensive to maintain. There is more demand for power, and prices are out of control for electricity. This is why Solar Power is so important to America, because it’s up to date technology that is simple ,reliable ,much more affordable and clean for the environment. This energy will also play a big part in American security because with a vulnerable electric grid .god forbid a cyber attack can disrupt our power grid, but with Solar energy and backup batteries we have more protection from this . American energy is more protected with clean renewable energy. And we are at race with China for Clean renewables . And who ever come out on top may have the edge. We need to be Pro renewables more then ever
We have to adjust as always even in the worst case scenario. I do think they will find some middle ground but overall the solar industry will adapt. Some sales companies that do the easy sale, not necessarily in the interest of the customer will fold but the ones that are established and knowledgeable will pivot and adjust.
In the long run the less govt involvement in solar the better. Of course I wish none of this was occurring but giving up is not an option so let’s see what happens and adjust as an industry.
Democrats and Republicans alike are bought and paid for by tyrants and oligarchs.
They distract and divide us with culture wars while waging a class war on us for the last 40+ years.
It’s passed time to be grown ups and realize we need to abandon both corporate parties and start anew.
There is no saving this. It’s time to start over. It’s time for revolution.
For anyone that thinks this wont ruin the solar industry and want to say you see these bills come and go you are wrong. Without the tax credit and with what financing cost are now and what electric bills cost now the idea of doing solar doesnt make sense. With panel degradation and energy bills going up this will kill the residential solar industry. This isnt 05 or 09. Bills arent less, materials arent what they were it all cost more. If this passes you will see that it will end solar all over.
Completely false. Part of the bill, if you read it correctly, is enforcing banks to lower financing cost. Meaning new lenders with better rates will emerge. The cost of solar for homeowners who finance will most likely stay the exact same, believe it or not the banks fees are typically 30 percent, essentially canceling out the tax credit. If you think the world will stop using the sun for energy then you could not be more wrong.
Tim, respectfully, the data you shared in your message is incorrect. Congress, nor the president, can force banks to lower financing costs. Rates are determined based on a combination of SOFR, long term treasury yields, the creditworthiness of the consumer, the overall risk of the loan, and the competitiveness of the industry. Passing this bill takes away a critical incentive for consumers to make the leap to solar AND likely increases the borrowing costs of the United States as our deficit will increase under this package.
You are right that the world will not stop using the sun for energy — the problem is many Americans who would get solar in the near future will no longer have a material reason to do so.
These attacks are all done by fossil fooled republicans. Where are the analysts and podcasters who said that the IRA incentives were safe from this administration and the republican congresspeople that said over and over again that this is what they wanted to do?
From experience in using solar PV for 20 years now, the landscape has changed many times over these years and the “programs come and go” as have national solar PV entities like SolarCity, Real Goods Solar, Vivint, SunPower and others over a couple of decades as repurposed or gone from the consumer consideration for goods and services.
When I had the first solar PV system installed on a home, there were few and far between solar PV installers, the Federal tax allowance for a Solar PV install was capped at $2K and there was NO ITC until 2006-2007. There was a local Utility “energy program” that had a sliding scale subsidy that decreased YoY that allowed a substantial reduction of the cost of installing the system from around $9/Watt to right at $5/Watt in 2005. The simple ROI was (determined at the time) 22 years energy savings payoff, the reality was the system paid for itself in 13 years. That system is still on the roof of that home today offesetting energy costs, 20 years later. Today those that go “bigger” and adopt a BEV can actually reduce energy costs (electricity as well as a monthly gasoline cost) and save energy costs that will pay for the system in 5-8 years.
In 2015 I bought into another home (secondary residence) and by 2017 I installed solar PV on this home. Since the property was a (secondary residence) I could not take the ITC of 30% for installation. Still, in 2017 I paid out of pocket without the ITC $3.50/Watt to install a grid tied solar PV system that was (twice) the generation output in peak watts as the old system installed in 2005 with subsidies. Looking at adding some more panels and a smart BESS for arbitrage, self consumption after the sun goes down, resiliency and limited whole house backup during emergencies to smart circuit power for days, weeks, months from the same system. Depending on what the local electric utility “justifies” and receives as bundled electricity rate increases, this system will pay for itself in energy savings by 2026-2027. With all the half truths being vaunted from the electric Utility, “When your neighbor installs solar PV, (your) electic bill will go up.” Bypasses the IOU electric Utilities being allowed to “assured returns on investments” as a “regulated monopoly”. That rate of return is on average from 8% to 12%, in some cases more, I think of the cost overruns of the Plant Vogtle nuclear facility finally ‘fully?’ online in Georgia now. Administrations, programs, the push and pull of Energy corporations and lobbying of PUC or SCC commissions country wide are trying to influence the generation, storage and flow of energy daily. This is a marathon, not a sprint.
We are residential solar installers in Ripley County, Missouri and surrounding counties, all of which are impoverished communities. Many households in our area are without grid electric service and were paying $300 to $400 per month for gasoline to run generators. We lease and install solar systems that eliminate the use of gasoline powered generators in many cases and minimize gasoline expenses to under $100 per month in other cases. Our lease is $150 per month with an option to purchase the system in 61 months for a very reasonable market value at that time. We have helped many needy households. This legislation will close our company, taking away much needed jobs and electric service in our area. Regretfully,
ZEB
Both sides of the isle seem determined to crush our business model. It is shameful, in my opinion. After 45 years in the solar industry in San Francisco I am not going to fold up shop, but stopping the an individual from deploying solar and storage on their residence and allowing the ITC to be applied is clear evidence, in my view, that the political parties do not have the US citizen in mind to whom they supposedly serve.