The rush to install solar before the tax credits vanish is back in full force
Ed Murray has spent decades in the solar sector and vividly recalls the brutal downturn of 1985, when President Ronald Reagan ended the solar tax credits that followed the 1970s oil crisis. Murray, who leads the California Solar & Storage Association, notes that the trade group lost most of its members overnight—from 670 to just 37—as hundreds of solar companies folded without the incentives. He hopes history won’t repeat itself. Around that era, California’s governor also slashed a state solar tax credit, compounding the pain.
Yet the industry weathered that storm and rebuilt itself, thanks largely to Congress reinstating a federal solar tax credit in 2005. The aim was to accelerate renewable adoption and decrease dependence on foreign energy, a goal President George W. Bush articulated when he signed the measure into law. The trajectory shifted again with the Inflation Reduction Act (IRA) of 2022, which expanded and extended the credit until 2035, offering residential solar customers a 30% tax credit on installation costs.
Today, however, the political winds have shifted. The so-called One Big Beautiful Bill Act, backed by Republicans, is set to end the tax credit at the close of 2025. As a result, home solar installers and their customers are racing to finish projects and lock in savings before the deadline, even as they confront substantial hurdles. After 2025, the industry will need to adapt to a very different solar landscape.
“We’re in a mad rush; it’s chaotic,” says Murray.
The credit’s revival in 2005, followed by the IRA’s enhancements, created a calm period in which solar adoption grew significantly. The IRA, supported by broad political agreement at the time, allowed residential solar buyers to claim a credit equal to 30% of installation costs.
The current administration shift, however, has removed momentum from that policy, with the Republican-led Congress moving to wind it down by year’s end. This has spurred a surge in activity: EnergySage, a national solar marketplace, reported a dramatic jump in homeowners reaching out to installers after the spending bill’s July passage. Murray and others report similar spikes in demand.
That surge, though, comes with concerns. Permitting offices and utilities are overwhelmed by the flood of new applications, extending timelines. For Northern California-based Vital Energy Solutions, permit lead times have doubled to four to eight weeks, a delay attributed to the crush of activity. Local permitting delays threaten not only timelines but the ability to qualify for the year-end credit.
The national picture isn’t any brighter. Slow permitting is cited as the top barrier to driving solar costs down toward $2 per watt, according to EnergySage. Prolonged waits raise overhead, deter customers, and jeopardize eligibility for the 30% credit this year. In December, Vital Energy Solutions warned that around 120 customers in one congressional district could lose the credit through no fault of their own due to delays, urging policymakers to extend the deadline. Typical project costs range from roughly $15,000 to $50,000, with average installations around $37,000, meaning many homeowners stand to lose thousands if they miss the credit.
Utility delays have also worsened. Southern California Edison reported notable holdups in installing meter socket adapters needed to connect solar and battery systems, a delay tied to the surge in applications.
Supply chain issues and tariff policies have pushed up costs and created shortages of key components. Some installers have even had to hunt for basic electrical fittings at local stores only to find shelves empty.
Manufacturers have faced their own troubles. In November, QCells furloughed about 1,000 U.S. workers after shipments were detained by customs. Broader supply chain scrutiny and a fire at REC’s Singapore factory further disrupted deliveries. Ipsun Solar, based in Virginia, had to redesign and re-permit projects when REC components became unavailable, delaying installations. Ipsun’s CEO notes a fourfold increase in customers since June amid the tax-credit talks, and the company has offered to absorb the tax credit loss for qualifying customers affected by delays.
To survive a reduced role for the tax credit, installers are diversifying. Some are exploring roofing, HVAC, heat pumps, or EV charging installations. Commercial solar projects, eligible for a separate commercial credit through 2028, are providing some relief for larger outfits. However, smaller, independent installers may face a tougher road, potentially being absorbed by bigger players or going out of business when the musical chairs stop.
Despite the turbulence, residential solar isn’t doomed. Rising electricity costs, especially near data centers, continuous outages during extreme weather, and a growing focus on battery-backed systems are sustaining demand for home solar.
Industry insiders expect continued volatility as policy landscapes shift. Some players see an upside in third-party ownership models, such as leases and PPAs, which could appeal to customers who can’t afford upfront purchase costs. The end of the federal credit spurs these options, and some observers predict a shift back toward leasing as a more viable path for many buyers.
Sunrun, a prominent provider of solar subscriptions and PPAs, successfully lobbied to preserve certain protections in the spending bill, arguing that distributed solar assets can help stabilize grids amid rising demand. The company’s stock has risen meaningfully, and officials anticipate Sunrun and others will gain market share as the industry contracts.
Leaders like Ipsun’s Keshishian anticipate more third-party ownership deals next year, while acknowledging that PPAs can carry higher costs over time. Yet for many buyers, these arrangements may still be the only route to solar after the credit’s expiration.
Even so, the loss of the federal credit has sparked discussions about new financing models with lower rate escalators and lease-to-own options. EnergySage’s Walker notes that while the cut to clean energy credits is largely negative for the industry, the emergence of flexible ownership arrangements could help broaden solar access.
Ed Murray’s takeaway from enduring the 1985 tax-credit collapse and the current upheaval? “Save your money. And here’s hoping for a policy reset in the midterms—we’d welcome some form of tax credit again. It’s a tough business.”
If you found this analysis helpful, share your thoughts below: Do you think the solar industry’s pivot to leases and PPAs will outlast the credits policy shifts, or will a new incentive restore momentum? What model do you favor for a home solar project, and why?
