Why homeowners are suddenly rushing to install rooftop solar

Kristen Moe stood on her lawn and watched as installers from Lumina, a local solar company, carefully lifted several solar panels onto the roof of her one-story home in Kensington, Maryland. Moe and her wife, Jackie DeCarlo, had been waiting to install solar panels for years, but things kept getting in the way — their roof was too old, and then they had to wait to have it replaced.

But now, the couple has beat a key deadline. The Republican tax and spending bill, which President Donald Trump signed into law on July 4, slashes the rooftop solar tax credit that has been law for almost two decades. The change, analysts say, could crater an industry that has boomed over the past five years. It could also turn what is a smart financial decision for many homeowners into a wash.

DeCarlo and Moe will have gotten their panels in under the wire, before the law changes.

“It would give us a lot more pause,” said DeCarlo, of the loss of the tax credit. “We believe that the government has a role to incentivize solar, so we’re pretty discouraged about what’s happening.”

Installing home solar panels is costly. According to the clean energy company EnergySage, the average rooftop solar installation costs around $29,000 before tax credits. The credit cuts 30% of that cost, making installation feasible for many families. Over the 25-year lifetime of the solar panels, many families can save about $50,000 on their electricity bills.

Joe Ordia, a solar industry analyst, expects the change to be devastating. “If you take that tax credit away, there’s just no longer an economic incentive to invest in renewable energy at a household level,” said Ordia, who hosts the Solar Surge podcast. “There’s going to be a lot of solar technicians out of work.”

Many homeowners, Ordia warned, will have to wait 12 years to recoup their investment, instead of a typical seven or eight years. “You can buy Treasury bonds and get a similar return,” he said.

The United States has had some form of solar tax credit since 2005. Beginning in that year, residents could get a 30% credit for the cost of their panels, up to $2,000. A 2008 law aimed at stabilizing Wall Street removed the $2,000 limit, allowing customers to get an uncapped amount. According to recent data from the IRS, the average consumer gets around $8,000 back for their installation.

Since then, the credit has been extended multiple times, most recently by President Joe Biden’s Inflation Reduction Act. The credit was supposed to last another 10 years — until Republicans terminated it.

The president has been an outspoken critic of wind and solar. In an executive order on his first day in office on “Unleashing American Energy,” Trump mentioned coal, oil, gas, hydropower, and nuclear power — but not solar or wind. In an interview with Fox News last month, he called solar farms “ugly as hell.”

Brett Bouchy, the CEO of Freedom Forever, one of the largest residential solar companies in the United States, said he was disappointed by the removal of tax credits and the wind-down of the Inflation Reduction Act.

“I’m a Republican,” Bouchy said. But, he added, “if you look at the results of the Inflation Reduction Act, in terms of manufacturing and jobs that have come here to America, it’s exactly what Donald Trump and this administration wants.”

Analysts have predicted huge contractions in the solar industry. In an analysis last month, Morgan Stanley predicted that a full phaseout of solar tax credits would cause demand for rooftop panels to drop by 85% over the next 10 years. Other research groups have estimated that installations will fall by 40 to 50%.

Solar stocks dipped Tuesday after Trump released an executive order instructing the federal government to crack down on any remaining solar and wind tax credit loopholes.

The residential solar industry supports an estimated 100,000 jobs, according to the National Solar Jobs Census.

Diana Furchtgott-Roth, director of the center for energy, climate, and environment at the Heritage Foundation, argues that the rollback of credits is positive. Solar, she said, is making electricity more expensive. “If people want to have wind and solar, that’s fine,” she said. “But they shouldn’t get credits for it. That’s why electricity prices are soaring in blue states.”

Other experts have argued that rooftop solar is about three times more expensive and thus less cost-efficient than larger, utility-scale solar. Companies have countered that it is much faster to install rooftop solar than it is to create a giant solar farm.

Increasingly, many solar companies are offering third-party ownership as an option for homeowners, where the company owns the panels and the customer leases them for a low rate. This option has waxed and waned in popularity over the past decades, but it offers a different, corporate tax credit — until that, too, is phased out, in 2027.

“I think that we will see an even more dramatic shift toward third-party ownership over the next year and in the following years,” said Zoë Gaston, principal analyst for U.S. distributed solar at the research firm Wood Mackenzie.

Bouchy, of Freedom Forever, agrees. He expects that soon, only 5% of Freedom Forever’s customers will own their own panels.

Some companies are confident that climbing electricity rates will have consumers opting for solar. “Utility rates are going up across the board,” said Charlie Keyser, a sales consultant at Lumina who sold DeCarlo and Moe their panels, including in the D.C. region.

The new budget law is expected to raise electricity rates even more. According to a recent analysis, the average American will pay $165 more per year for energy in 2030 and $280 more in 2035 as the country pulls back on wind and solar power.

Still, Keyser recommends that homeowners interested in solar look into it now, before the credits disappear at the end of the year. Lumina, he said, is already getting inundated with calls from people who had been considering solar and now are trying to jump on it before the tax credit goes away.

“We’ll certainly help everyone we can before the end of the year,” Keyser said.

Moe and DeCarlo are slated to get around $6,000 back on their taxes for a roughly $17,000 installation of 12 panels, totaling 5.5 kilowatts. Given their current utility bills, their panels will pay for themselves within five and a half years. Without the credit, it would take closer to eight years.

DeCarlo said they would have tried to go solar even without the credit, though it would be more of a financial strain. They want the savings, but they also want to do something good for the environment.

“The sun is giving us free energy and we’re finding a way to harness it,” DeCarlo said. “That part is pretty cool.”