The sun is setting on residential solar in the United States as the Trump administration leans toward pulling the plug on clean energy incentives. In a shift in policy, the latest draft of the  “One Big Beautiful Bill Act” omits residential solar lease providers from the Investment Tax Credit. Already, solar stocks are falling and bankruptcies are ticking up as tension and worries rise. 

Until now, home solar and batteries have benefitted from a 30 percent tax credit. That would drop to zero percent 180 days after Trump signs, if this latest version of the bill goes through. However, the bill is expected to undergo further changes as it moves through the Senate. But no matter the fine print, the writing is on the wall for solar companies in the United States, and the markets are already strongly responding to this new antagonistic policy space for solar. 

PV Magazine reports that the domestic residential solar industry is “on the brink of collapse,” adding that the newest draft of the bill is sweepingly discouraging for clean energy as a whole, but particularly punishing for residential solar. While cuts were anticipated, this new proposed slashing of federal credits is coming far sooner than expected. What is more, this blow is hitting an already bruised and battered industry which was already reeling from tariffs that hit solar supply chains hard. 

“The residential solar industry is no stranger to highs and lows, often referred to as the ‘solar coaster’ by those who have weathered the storm of hot-and-cold policies that create markets and then take them away at a breakneck pace,” PV Magazine reports. “But the latest draft of the federal reconciliation bill may represent a crash.”

Already, solar company bankruptcies are piling up. Just this month, two major industry players – residential solar provider Sunnova and financing firm Mosaic – filed for bankruptcies. Sunnova pointed to “uncertainty over the nation’s commitment” to solar power as a major motivation of the filing. “The two companies are among the largest casualties in the sector since Donald Trump took office,” reports the Financial Times. 

The news has also hit the stock market hard, with a wide array of solar companies taking major hits. Solar inverter company Enphase Energy and solar panel manufacturer First Solar dropped by 27.2 percent and 19.3 percent, respectively, placing them amongst the largest decliners on the S&P 500. “Solar stocks have had a terrible run lately, amid anticipation that this would happen,” reports Barron’s. Looking at the last year, Enphase, SolarEdge, and Sunrun are all down between 52 percent and 70 percent.

“We are in a fight for our lives,” Abigail Ross Hopper, CEO of the Solar Energy Industries Association, said at a rally in Washington earlier this week. “The bill does not achieve American energy dominance . . . In the residential solar industry alone, 1,500 small businesses and over 250,000 jobs are at risk.”

While the prognosis is grim for residential solar, utility-scale solar may be shielded from some of the worst effects of the bill and be able to bounce back better. The latest draft of the bill is “less punitive for utility-scale developers,” which will not be bound by the same leasing restrictions as residential companies. Furthermore, energy demand growth will help to stabilize large-scale energy generation overall. “Even absent tax credits we believe solar remains highly cost competitive with other fossil fuel generation technologies,” RBC Capital Markets analyst Christopher Dendrinos told Barron’s.

Hydropower, nuclear energy, and geothermal energy will also be spared. The current iteration of the bill extends their tax credits through 2036.

By Haley Zaremba for Oilprice.com 

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