As the GOP moves forward with a domestic policy bill to eliminate tax credits for solar energy, experts warn this could lead to drastic decreases in rooftop solar installations, potentially halting a trend that has seen over five million households adopt solar energy across the country.
Impending Cuts to Federal Solar Tax Credits Could Cripple Rooftop Solar Expansion
Impending Cuts to Federal Solar Tax Credits Could Cripple Rooftop Solar Expansion
The proposed GOP tax bill threatens to halt the growth of rooftop solar installations across America, with analysts predicting significant drops in demand.
The adoption of rooftop solar panels has surged in the U.S. over the past two decades, with over 5 million households from California to Maine installing them to harness solar energy and save on their electricity costs. However, this growth may soon face a severe setback due to a recent domestic policy bill passed by House Republicans, which aims to eliminate federal tax credits for homeowners and solar leasing companies by the year's end. Analysts and industry leaders warn that if this legislation is enacted, the momentum behind rooftop solar could drastically diminish.
"This sets us back,” exclaimed Ben Airth, policy director for Freedom Forever, a major residential solar installation company. "I’ve been in this industry 22 years and remember when it was only rich people, doomsday preppers, and environmentalists installing solar panels." Research from Ohm Analytics hints at a possible 50% decline in residential solar installations next year if the House bill is signed into law. The lack of tax incentives could extend the payback period for homeowners investing in solar energy systems to an average of 17 years. Morgan Stanley's more pessimistic outlook predicts an 85% decrease in rooftop solar demand by 2030.
While Republicans are also targeting tax breaks for other renewable energy technologies, such as wind turbines and large solar farms, the impact on residential rooftop solar may be more pronounced. This is primarily because the costs associated with rooftop solar can be two to three times higher per unit of electricity compared to utility-scale solar installations. Consequently, the residential solar sector is more vulnerable to subsidy shifts.
As the Senate drafts its version of the domestic policy bill, solar industry executives have rallied in Washington, D.C., advocating for a more gradual phase-out of the energy credits. They aim to underscore that the solar sector not only creates jobs—approximately 300,000—but also provides significant savings on electricity costs for homeowners.
