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Bay Area solar owners could see tax credits slashed under Trump's spending bill
The budget bill being debated in Congress could have serious implications for a lot of industries, but some are saying it could be a disaster for the residential solar industry.
Solar companies are already hurting from reductions in government subsidies, but a threat to eliminate the federal solar tax credit could be putting the industry on the verge of collapse.
Solar power itself is a proven technology with a lot of benefits to offer as a clean, renewable source of energy. But right now, a lot of energy is going into just keeping the business alive.
"I think the industry is going to go through some very hard times," said Severin Borenstein, faculty director at UC Berkeley's Haas Energy Institute.
He said rooftop solar has gone through a lot of changes in the last few years, with the State reducing how much solar system owners are credited for the energy they produce.
But lately things have been improving.
"2024 was back to 2021 levels, so they had really recovered from a drop," said Borenstein. "But now, with what the Trump administration is doing, I think there's a lot of concern. There were already a lot of rooftop solar companies that had pretty tenuous financing and were having a hard time. And I think this is pushing some of them over the edge."
He was talking about a Republican effort in the budget bill to eliminate the 30 percent federal tax credit given to people who install solar systems on their homes. That, along with the tariffs being imposed by President Trump, has solar industry insiders calling foul.
"It's really sad to see solar energy being caught in partisan crosshairs," said Brad Heavner, executive director of the California Solar and Storage Association. "The sun is not Republican or Democrat. The need for more electricity is not Democrat or Republican. We need more energy in America and Congress has a role to play in making that happen."
But right now, the role Congress is playing is to restrict rooftop solar, along with other renewable energies, in favor of older sources like fossil fuels and coal.
The effect has already been devastating, with solar companies going bankrupt across the country. On Monday, solar giant Sunnova Energy filed for protection and last week, Solar Mosaic, a major lender in the business, also went belly up. But Gordon Johnson, founder of a research firm studying the industry, said the companies may have brought it on themselves simply by the way they did business.
He said some misrepresented their costs to lenders in what he compared to a Ponzi Scheme.
"The solar industry in the US is in a state of significant disarray. And it's not something that could not have been predicted," said Johnson. "They perpetually issue debt. These companies are always issuing debt. As soon as they can't issue debt, and they can't plug that hole of the actual cost of the system versus what they show Wall Street, they quickly go bankrupt."
Higher interest rates and equipment cost inflation have also figured into the mix. One analysis found that, nationwide, more than $14 billion in clean energy and electric vehicles have been cancelled or delayed as a result. The prospects for the industry aren't good right now, but Joe Osha, an analyst for investment banker Guggenheim Securities, said rooftop solar should not be confused with the overall solar energy market.
"In megawatt terms, I can tell you that the residential solar business, as visible as it is, is only a tiny fraction of the solar generation that gets added into this country each year," said Osha. "The vast majority of it are these large utility-scale solar farms. I don't see any scenario under which that utility-scale solar business collapses."
That leaves residential solar twisting in the political wind. And experts are saying small companies that have been the backbone of California's solar revolution will have a hard time staying in business.
