Op-Ed: Solar–What’s going to happen under Trump?
This is the hot topic right now, and the Inflation Reduction Act is what everyone is looking at. The IRA was a big shot in the arm to renewables, and solar, being the most prominent renewable resource, was benefitted with the return of the 30% Federal Investment Tax Credit, additional tax credits adders, flexibility for tax-exempt entities to get cash in lieu of the ITC, and ways to transfer the tax credit for cash.
These are all huge benefits to the solar industry; however, the guidance from the IRS and Treasury didn’t come until recently. This means that we’ve waited a year and a half to understand how to use these new benefits under the law, and now that we get to use them, we are staring into the barrel of a shotgun waiting for the new administration to take office. Fortunately, the solar industry is really good at pivoting. We have been in business for the past 15 years since we installed our first solar panel at 175 watts. When the government, state, and utilities decide to make changes, which there have been LOTS of over the past decade and a half, the solar industry, being incredibly resilient, figured out a way to pivot to continue the longevity. Fast forward to today, and the solar train is on the move and can’t be stopped.
Let’s consider the IRA, which was bipartisan at the time. Now that the Republicans control the House and Senate, I personally don’t believe that the whole IRA will be repealed. Maybe parts of it that are unused; however, the IRA stimulated the solar business, which is the number 1 job growth industry in America. Also, there have been “huge, billions, and more billions” of investments by global manufacturers to set up shop in the United States and make solar panels here. So if you consider that most top 10 global solar panel manufacturers and most global inverter companies have already set up shop or are in the process, the IRA is working and working very well. You’d have to be a moron to miss that and repeal the whole damn thing. House Speaker Mike Johnson said it would be impossible to repeal the full IRA, but we may see some trimming of the fat if you want to call it that.
There are a lot of reasons to be optimistic about the future in solar. Domestic content aligns with Trumps vision to bring back jobs to America and stop buying Asian product. We haven’t seen any talk on the Energy Community adder or Low Income Adder yet either. The low income adder was oversubscribed when it opened its application portal, and Energy Communities is being used as well, so how to repeal these would make a tremendous amount of work for the new Administration. Based on past experience, and Trumps love for real estate, bringing back full depreciation or “property expensing” is a good possibility. Right now in 2025, we’re allowed the 40% bonus depreciation which is phased down from 80, 60 and now 40. I would not be surprised if we get full depreciation back and that is another big benefit that spurred solar transactions when he was in office last.
Interest rates have a big effect on solar deployment. Lower interest rates would be a huge catalyst for solar deployment, perhaps even more so than the tax credit adders. If the general business owner population isn’t making healthy, positive net income, then they can’t use the ITC and depreciation right away. We need businesses to make more money with a positive outlook on future business, which makes for the best solar environment. This only happens when interest rates come down from their all time highs. Access to capital will wildly favor our industry, and based on where inflation is currently, we see a lower interest rate environment ahead. A robust economy and falling interest rates are key for exponential solar growth, like a shot of horse steroids in the butt of the solar industry. Optimism can be found anywhere you look; it depends on the looking glass you’re looking through to find it.
For right now, all the benefits under the IRA are law, so use them. Use every benefit to sell, and if you get an objection of waiting to see what Trump does, bring the future to the present and act as if he’s going to repeal some benefits, and get your clients to act now while they are still available. That is a reality of what “could” happen, so sell like there is no tomorrow and use these awesome benefits to deploy more solar. Our children’s future depends on it, and we want to leave this world a better place than we got it.
John McDonnell
CEO
Watthub Renewables