The solar industry is disappointed: After months of lobbying Congress to preserve clean energy tax credits for solar power, the “One Big Beautiful Bill Act,” which President Trump signed last month, phases out tax credits for investment in and production of solar power.
The 2022 Inflation Reduction Act granted subsidies for solar projects that started construction before 2033. Under Trump’s budget bill, those credits will only be available for projects that commence construction within the next year or are in service before the end of 2027.
Brendan Bell, COO and managing director of clean energy firm Aligned Climate Capital, told Tech Brew that the policy changes are bad for the climate and the US economy.
“All of the manufacturing that had come to the US to support these new rules—which was creating jobs in places that haven’t had jobs in a long time, creating an economic industrial base here in the US—that’s gone,” he said. “If there’s anything that is most disastrous about this, it is, there is no longer a reason to have a solar manufacturing plant in the United States.”
But that doesn’t mean solar won’t bounce back. Solar installers, developers, and investors told Tech Brew that the industry will go through a period of transition in which consumers and businesses face a lot of uncertainty about whether they’ll be able to receive those sunsetting tax credits, and power prices will rise. But once the dust settles, they said, solar will be able to survive without subsidies.
“Every developer who you’ve signed a contract with is going to come back and say ‘I need you to pay more for your power,’ because of tax credits,” Bell said. “But people will transition to a different world, and it just means that consumers, whether you’re [a business] or you’re a homeowner, you’re going to pay more for power.”
For now, Bell said Aligned will move forward with projects already in motion and work to “get ahead of the [foreign entity of concern] requirements,” a provision in the new law that restricts clean energy projects from using equipment from foreign entities, like China.
“Our contracts will just build in adjustments,” Bell said. “If you get the tax credits, it’s this price. If it’s not, it’s this price.”
Dealing with uncertainty
However, developers (and the people paying them) won’t know if they’ll be able to receive tax credits because they don’t control when a solar power system is placed in service—utilities do. As for residential solar, Absolute Solar CEO Rob Kaercher told Tech Brew in the spring that some clients were pausing or canceling solar projects because they were worried that the tax credits would disappear. Now, he said, clients are confused about the phase-out process.
“There’s just unease about what [we can] trust,” Kaercher said of his clients. “Regardless of incentives or underlying policy, when you obscure what’s going on and make it difficult to follow, that uncertainty just hurts industries across the board.”
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Absolute Solar is currently “extremely busy and booked out” with all types of solar projects, but Kaercher said he expects most of its projects will be commercial or nonprofit installations next year, given that the residential clean energy credit is only available until the end of 2025.
“It’s more prioritizing or benefiting larger industry, utility-scale projects,” Kaercher said, which “leaves your average person with less tools and less ability to invest in their own future and combat ever-rising rates.”
The loss of a continued solar boom will also hurt the grid, Kaercher said, as residential solar helps flatten the energy demand curve that strains the grid and leads to outages.
Using other incentives
Though the tax credits are being phased out, many states still allow net metering, an energy billing policy that discounts the electricity bills of commercial or residential consumers whose solar energy systems send power back to the grid. And according to Steve Hamile, COO of Nevada solar provider Sol-Up, net metering is more important than tax credits when it comes to making solar energy systems affordable. Because of that, Hamile told Tech Brew he’d always wanted the tax credits to phase out—just not as fast as they will now.
“We’ve been a strong believer that subsidies need to sunset over time,” Hamile said. “We just feel that it should have sunset [at] a slower pace.”
That said, some states don’t have net-metering rules, and utilities aren’t required to provide compensation for consumers with solar energy systems. Solar in those states and areas, Hamile said, will be most affected by the elimination of the tax credits.
Hamile isn’t alone in wanting to see the solar industry stand on its own without subsidies: Jorge Vargas, CEO of solar development and financing company Aspen Power, told Tech Brew that the tax credits are being phased out too quickly.
“[The US’s] competitive edge was the fact that we made our infrastructure decisions over 10, 20-year spans—which is the right thing to do. But now this administration chose to change that, and in a very hasty and poorly drafted way,” Vargas said. “That’s what the biggest impact is: [the disruptive] way that we’re going to do this.”
Vargas also said he expects the solar industry to get a boost from another type of incentive: some “big, beautiful PPAs”—power purchase agreements—with companies looking to lock down energy prices before they start to rise.
“We’re ready to embrace what’s next. And in a world where power prices increase, we have a product that can compete,” Vargas said. “We will emerge from this.”