Why Rooftop Solar Could Crash Under the Republican Tax-Cut Bill

Over the past two decades, more than 5 million U.S. households from California to Georgia to Maine have put solar panels on their roofs, drawing energy from the sun and reducing their electric bills.

But that could soon come to a crashing halt.

The big domestic policy bill passed by House Republicans last month would, by the end of this year, eliminate tax credits for homeowners and solar leasing companies that have fueled the popularity of rooftop solar. If it becomes law, it would lead to an immediate plunge in installations, analysts and companies say.

“This sets us back,” said Ben Airth, policy director for Freedom Forever, one of the country’s largest residential solar installers. “I’ve been in this industry 22 years and remember when it was only rich people, doomsday preppers and environmentalists installing solar panels on their roofs.”

One analysis by Ohm Analytics, an energy data firm, estimates that residential solar installations could fall by half next year if the House bill becomes law. Without the tax credits, it would take 17 years, on average, for homeowners to earn back their solar investments. A more pessimistic analysis by Morgan Stanley projects that rooftop solar demand could fall by 85 percent through 2030.

While Republicans want to curb tax breaks for other renewable energy technologies like wind turbines and large-scale solar farms, the consequences for rooftop solar could be more severe. Rooftop solar can cost two to three times as much per unit of electricity as large solar arrays on farms or in deserts, and the residential industry is more vulnerable to shifts in subsidies.

The Senate is now writing its version of the domestic policy bill, and solar executives have descended on Washington to plead for a more gradual wind-down of the energy credits. They note that the solar industry employs roughly 300,000 workers and that rooftop systems can help homeowners cut their electric bills.