$20 billion US solar market is at risk under Trump’s administration

The future of the $20 billion U.S. residential solar industry now depends on Senate Republicans after the House of Representatives passed a bill that could severely harm the sector. 

Industry leaders and market analysts say the bill if passed in its current form, would eliminate vital tax credits and damage solar businesses and homeowners.

This week, the House approved a large tax and spending bill that removes tax credits for both companies that lease rooftop solar systems and homeowners. These credits have been a key financial tool for making solar power more affordable and accessible. Without them, the solar market could face major disruptions.

The industry is already struggling with several challenges. These include high interest rates, new tariffs on imported solar equipment, and reduced state incentives, particularly in California, the biggest market for rooftop solar in the country.

One of the nation’s largest solar companies, Sunnova Energy International Inc., is reportedly preparing for a potential bankruptcy.

Solar supporters are lobbying in the senate

Solar companies and green energy supporters have started lobbying in the Senate. They hope that moderate Republicans may oppose the House version of the bill. 

Some senators are already expressing concerns about removing support for clean energy. However, with a slim majority, Senate lawmakers may find it difficult to make changes without facing resistance from more conservative members.

Despite support from the Inflation Reduction Act, passed during President Joe Biden’s term, the residential solar industry has not had smooth sailing. Higher borrowing costs have made it harder for solar companies to raise money and for homeowners to finance installations.

Additionally, California’s policy changes have cut the amount of money that solar customers can earn by selling excess power back to the grid, making it take longer for them to recover the cost of their systems.

Meanwhile, the U.S. International Trade Commission voted this week to move forward with new tariffs on solar equipment from four Southeast Asian countries. These countries supply most of the solar cells and panels used in the U.S. The new tariffs, which range from 34% to over 3,500% depending on the country and manufacturer, come after a months-long trade investigation. Some duties are already being collected.

The U.S. residential solar market declined by 20% last year, according to Bloomberg. If the tax credits are removed, another 18% drop could occur over the next decade, said BNEF analyst Pol Lezcano.

Removing solar credits would make the US solar industry unstable

Following the House bill’s release on Thursday, solar company stocks plummeted. Sunrun lost over one-third of its market value. Other companies, like Enphase Energy Inc. and SolarEdge Technologies Inc., also saw sharp declines. Critics say the bill effectively rolls back many clean energy supports included in the Inflation Reduction Act. 

Removing the credits now would take away the stability that foreign companies need to continue investing in the U.S. green energy sector. The possible loss of tax credits could also severely affect small installation firms, many of which are family-run businesses. 

The impact on solar leasing would be especially severe, analysts warn. Joseph Osha of Guggenheim Securities noted that leases make up around 70% of new solar installations. “It’s pretty dire,” he said.

In response, the solar industry is preparing for a strong lobbying effort in the Senate. Leaders say they are fighting to stop a law that could cause large-scale job losses and economic damage.

Jason Grumet, CEO of the American Clean Power Association, spoke at the trade group’s convention in Phoenix and urged lawmakers to change course. “We urge the Senate to reject the strident House approach and pass a reasonable energy policy for the American people,” he said.

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