The US House of Representatives has proposed abruptly ending the federal tax credits for solar panels at the end of the year, threatening to upend the economic calculus of powering homes with sunlight. The proposal would eliminate the 30% credit starting in 2026 and phase it out by 2032.
Homeowners who rely on solar power could face significant financial hurdles without the tax credits. According to Wood MacKenzie, a principal analyst for residential solar at the energy consultant, the average cost of a solar system is around $28,000, meaning a tax credit would be worth about $8,500. Without this incentive, the payback period may grow, making it less financially viable for many homeowners.
The 25D tax credit would still apply to systems installed this year, but it would disappear entirely after that. This could lead to a surge in installations followed by a market contraction as the industry adjusts to the new reality.
The solar industry is already facing significant challenges, including decreased state incentives and layoffs. Some Republicans have expressed concern about the impact of policy changes on their districts and the economy.
“It’s going to be devastating for companies, their employees, and their customers,” said Sean Gallagher, senior vice president of policy at the Solar Energy Industries Association. “This will kill an industry that supports hundreds of thousands of workers and tens of billions of dollars in investment every year.”
The fate of the solar tax credits now rests with the Senate, where experts hope for a more targeted approach to reform. However, policy volatility remains a significant concern, as it can freeze investment, raise costs, and damage market confidence.
Source: https://www.wired.com/story/if-you-want-to-claim-the-solar-tax-credit-install-now