08/04/2026
We Warned This Would Happen: The Real Cost of Eliminating Solar Tax Credits
For years, those of us in the solar industry warned that abruptly eliminating clean-energy tax incentives would have serious consequences. We said it would raise the cost of solar for homeowners, lengthen the time required to recover their investment, eliminate good-paying American jobs, force local installers out of business and slow our progress toward energy independence.
Those warnings were dismissed as political exaggeration.
Today, they are becoming reality.
Homeowners Lost the 30% Solar Credit
The Residential Clean Energy Credit once allowed qualifying homeowners to deduct 30% of the cost of a solar installation. Under the 2025 federal tax law, that credit was terminated for installations completed after December 31, 2025. The IRS confirms that even homeowners who signed contracts or paid deposits before the deadline cannot claim the credit if their systems were not completed by the end of 2025.
This was never merely a benefit for solar companies. It helped ordinary families overcome the large upfront cost of purchasing their own energy systems.
Once the credit disappeared, the financial calculation changed almost immediately.
Industry estimates reported by Reuters indicate that losing the incentive made a typical residential system approximately $8,000 more expensive and increased the average payback period from roughly seven years to about ten years.
That is exactly what we warned would happen.
Solar panels did not suddenly become less effective. The sun did not stop shining. The government simply made it harder and more expensive for working families to own the equipment that generates their electricity.
American Workers Are Paying the Price
We also warned that weakening the residential solar market would lead to layoffs, restructuring and business failures.
That is now happening.
Enphase announced approximately 160 job cuts. Freedom Forever reportedly withdrew from 10 of its 30 state markets and laid off about 20% of its workforce. Purelight Power filed for bankruptcy, affecting roughly 200 workers, while Texas-based TriSMART Solar halted operations.
These are not abstract statistics. These are electricians, roofers, installers, sales professionals, engineers, warehouse employees and office workers. They are Americans who built careers around helping homeowners lower their energy costs.
The residential solar sector is one of the most labor-intensive parts of the clean-energy economy. When installations decline, the consequences reach local families and communities almost immediately.
The Residential Market Is Contracting
Analysts once expected residential solar installations to grow in 2026. After the tax credit was eliminated, one major forecast was revised from 8% growth to a 20% decline. Wood Mackenzie projected that installations could fall to their lowest level since 2020 and may not fully recover until near the end of the decade.
The first-quarter numbers require some context. Residential installations were still 6% higher than the same period in 2025, but they fell 15% from the previous quarter. The Solar Energy Industries Association explained that early-2026 activity was supported by projects initiated during the rush to complete installations before the tax credit expired. Across the entire solar industry, first-quarter installations declined 27% from the previous year.
In other words, some of the activity we saw at the beginning of 2026 was not evidence that eliminating the credit caused no harm. It was unfinished business spilling over from homeowners racing to beat the deadline.
Homeownership Is Being Replaced by Corporate Ownership
Perhaps the most troubling consequence is the change in who receives the benefit.
Homeowners who purchase systems with cash or loans can no longer claim the residential credit. However, certain companies that retain ownership of rooftop systems and sell electricity to homeowners through leases or subscription-style agreements can still qualify for separate business incentives.
In practical terms, the policy did not eliminate every solar subsidy. It shifted much of the advantage away from individual homeowners and toward corporations and financing companies.
Families who want to own their systems are placed at a disadvantage, while leasing and third-party ownership become some of the few remaining ways to access tax-supported savings.
That is not greater consumer freedom. It is fewer choices for homeowners.
Investment Uncertainty Has Real Consequences
The damage extends beyond residential installations. E2 reported that nearly $34.8 billion in previously announced clean-energy investments was canceled, closed or downsized during 2025, along with more than 38,000 existing or anticipated jobs. Those figures include electric vehicles, batteries, manufacturing and other clean-energy sectors, so they cannot all be attributed solely to the residential solar credit. However, they clearly demonstrate what happens when long-term energy policy is replaced by uncertainty and abrupt reversals.
Businesses cannot confidently build factories, hire workers or invest billions of dollars when federal energy policy may change after every election.
Capital demands predictability. When America becomes unpredictable, investment moves elsewhere.
The Greatest Irony
The United States is experiencing rapidly growing electricity demand. Data centers, artificial intelligence, manufacturing, transportation and the increased electrification of homes are placing greater pressure on the power grid.
At the same time, solar and battery storage supplied 91% of all new electricity-generating capacity added during the first quarter of 2026, with solar alone accounting for 60%.
The Energy Information Administration also reports that solar represents approximately 51% of the utility-scale generating capacity planned for 2026.
Solar is therefore not a failed technology that needed to be rescued from the marketplace. It is one of the fastest and most widely deployed sources of new American electricity.
Utility-scale solar will continue growing because the country needs the power. The real casualty is distributed, homeowner-owned solar—the form of energy production that allows ordinary families to generate electricity on their own property and gain greater control over their monthly expenses.
This Was a Choice, Not an Accident
Higher costs were predictable.
Longer payback periods were predictable.
Layoffs and business failures were predictable.
Declining residential installations were predictable.
A shift from homeowner ownership toward corporate-controlled leasing was predictable.
We warned that eliminating solar tax incentives would not make electricity cheaper. It would make energy independence harder for ordinary Americans while creating instability in one of the country’s most important emerging industries.
Now that these consequences are appearing, policymakers should stop pretending they were unexpected.
Solar energy is not about one political party. It is about American jobs, household affordability, grid reliability, domestic energy production and the right of homeowners to produce their own electricity.
The question is no longer whether the warnings were justified.
The question is how much more damage we are willing to accept before we correct the mistake.
The climate crisis did not disappear when the tax credit expired. Electricity demand did not stop growing. The only thing that disappeared was an important opportunity for American families to invest in their own energy future.
