Rooftop Solar Faces Uncertain Future as Tax Breaks Hang in Balance

The potential loss of federal tax credits could massively impact the solar installation market and the jobs reliant on it.

Over the last twenty years, the growth of rooftop solar has transformed over 5 million U.S. homes from coast to coast—spanning states like California, Georgia, and Maine—into contributors to renewable energy, offering a clear advantage of lower electric bills. However, upcoming changes posed by the current domestic policy bill backed by House Republicans could spell disaster for this burgeoning industry.

The bill, if enacted, would eliminate crucial tax credits for homeowners and solar leasing firms by the year’s end, leading to an abrupt decline in solar panel installations. “This would be a significant setback,” stated Ben Airth, policy director for Freedom Forever, one of the nation’s leading residential solar installers. He recalls a time when only affluent households and die-hard environmentalists ventured into solar, signaling a steep rise in accessibility in recent years.

Analytical projections by Ohm Analytics suggest that if the legislation passes, residential solar installations could plummet by 50% in 2026. Presently, a lack of tax incentives would extend the average payback period for homeowners making such investments to 17 years. Morgan Stanley's more cautious take predicts an astonishing decline of 85% in rooftop solar demand by 2030.

While the G.O.P. aims to reduce tax incentives for other renewable sectors, like wind energy and large solar farms, the rooftop segment appears especially vulnerable, as this kind of solar power costs significantly more per unit of electricity compared to larger installations in open spaces. As the Senate formulates its own version of the domestic policy bill, solar industry leaders are actively urging for a gradual phasing out of these energy credits. Their argument emphasizes the importance of the solar sector, which supports approximately 300,000 jobs, and the ability of rooftop systems to significantly lower homeowners’ electricity costs.