Update July 4: President Trump signed the bill into law.
The House of Representatives on July 3 passed the final version of a budget reconciliation bill that takes aim at solar and wind energy in favor of fossil fuels. The bill now on the president’s desk will end the residential solar tax credit at the end of this year and add new component restrictions to large-scale projects that begin construction after 2025.
There will likely be a mad dash for developers to start construction on solar projects by the end of the year to avoid supply chain restrictions. Read our Q&A with a Baker Tilly tax expert on the implications of these major changes.
Abigail Ross Hopper, president and CEO of SEIA, issued the following statement in response to the bill’s passage:
“The bill being sent to the president’s desk today is a significant step backwards for our nation’s energy economy at a time when we can least afford it. In the face of rising energy costs, global instability, and growing demand for power, Congress has turned its back on the very industries that are adding the majority of the new electricity generating capacity to the grid.
“America is in the midst of an energy manufacturing boom, with new solar and storage factories opening across the country thanks to the forward-looking policy this law will upend. Now many of these brand new factories will be forced to shut down and lay off thousands of workers, gutting communities that were finally seeing the kind of industrial revival rural America needs and handing an untimely and strategic victory to China.
“While this bill avoided some very damaging provisions, it is deeply disappointing to see partisan politics outweigh practical pro-growth solutions that serve all Americans. Solar and storage are America’s best bet to lower energy costs, build long-term energy resilience, and break free from the grip of foreign energy dependence. It is especially disheartening to witness the total disregard for the thousands of small businesses in the residential solar sector that were given only months to reinvent themselves.
“Regardless of what happens in Washington in the coming months and years, markets will continue to drive outcomes. The solar and storage industry is resilient, and SEIA will keep fighting every day for smart, stable, business-friendly policies that deliver on authentic and true American energy independence,” she continued.
““Regardless of what happens in Washington in the coming months and years, markets will continue to drive outcomes.””
Context after the first OPEC oil embargo in 1973 and secondary shot across the U.S. bough in 1977, I was all in on “something else” and solar PV was nascent in those days and “very expensive”. Right around $50 and up to $75/watt for panels back in “those days”. AFTER 32 years and improving my skill set and paycheck, I was able to buy into solar PV for my home. At that time in 2005 there was no ITC, but a $2K Federal tax credit “capped”. There was a sliding scale utility program that reduced up front costs of the system substantially. Even then a simple grid tied system with utility subsidy was $6/watt installed. In 2017 Trump 1.0, I put solar PV on the home I’m in now, without the ITC, out of pocket with some onerous soft costs. I have a system now that generates twice the energy of the old system for right at the same price point at $3.50/watt installed in 2017. Today that same system installed without the ITC is going for around $2.88/watt for a grid tied system. Folks are “playing politics” and losing sight of the “Long Game”. Considerably, the IRPs filed by electric utilities are starting to project 10 year costs of grid upgrades will drive electricity rates 4.5% to 6.5% YoY for the next 10 years.
Two realities, this is a marathon, not a sprint. When YOU remove the middleman from your daily energy needs you save money. A codicil, the upfront costs of a solar PV/(BESS) system, when bundled residential electricity rates go up, your ROI goes down.