A Look Ahead for Solar Suggests Acting Now May be the Wisest Path

We've received many questions in recent lately about how the new Trump administration might impact solar policy, particularly the 30% solar and battery tax credit renewed by the Inflation Reduction Act in 2022. While details are still unfolding, and we certainly cannot predict the future, some early policy moves and public statements provide some insights. Though the future of solar incentives remains somewhat uncertain, the best way to secure the full 30% tax credit is to get your system installed in 2025.

Solar is facing local challenges as well as national. Proposed utility policies and rate hikes are becoming more frequent, signaling more regular increases in energy costs. As electricity prices go up, solar buyback rates continue to shrink – i.e. you get fewer credits when you send excess solar electricity back to the grid. It’s important to remember that when you sign a 10-year solar interconnection agreement, your buyback rate is locked-in for the duration of the contract. As such, anyone who has already gone solar can rest easy, but for those still on the fence, now is a good time to take another look. 

As we enter 2025, assessing how evolving federal and local solar policies may shape the industry's future is crucial. While we cannot predict the future and prefer to steer clear of political debates, early legislative actions and public statements suggest that significant changes could be on the horizon. 

Locally, the impact is already being felt—APS implemented an 8% rate increase in March 2024, and SRP has approved a 3.9% hike, with another proposed for late 2025.

Let's dive into what lies ahead for solar in 2025 and beyond.

The 30% Solar Tax Credit and the inflation reduction act

The Inflation Reduction Act (IRA) of 2022 extended the 30% federal solar tax credit through 2034. However, In January 2025, President Trump issued an executive order titled "Unleashing American Energy," which mandates a 90-day suspension and review of funding from the Inflation Reduction Act (IRA). 

A president cannot legally refuse to spend funds approved by Congress. Additionally, just last week, many Republican lawmakers supported continuing IRA tax credits, highlighting the jobs and investments the law has brought to their districts. It remains unclear how these tax credits may change. Given the IRA's bipartisan support, most feel a full repeal is unlikely.

It's also important to note that the executive order explicitly targets offshore wind projects and electric vehicle mandates, with little mention of solar energy. President Trump has previously expressed support for rooftop solar panels, stating, "I'm a big fan of solar." 

If you've already made qualifying clean energy upgrades, such as installing solar panels, you should still be eligible for the associated tax incentives when filing your 2024 tax returns. While we can't predict the future or guarantee the solar tax credit will remain the same going forward, the most likely way to capture the full 30% solar and battery tax credit is to get your system installed in 2025. 

Source: E&E News
Source: Energy Sage

Tariffs and the impact on Solar Panel Pricing

The potential reinstatement or adjustment of tariffs on solar panels under the Trump administration could significantly raise panel prices for American consumers. While the goal of boosting domestic panel manufacturing is commendable—also supported by the Inflation Reduction Act through enhanced tax credits for U.S.-made products—many components used in domestic panel and battery production are still imported and likely subject to tariffs, potentially driving up consumer prices.

In addition, escalating U.S.-China trade tensions have led China to impose export controls on critical minerals, with further restrictions under consideration. Last month, China banned U.S. exports of key minerals like gallium, germanium, and antimony, which are essential for military and technological applications. Some analysts are warning that China may expand these measures to rare earth elements vital for solar panel and battery production, leveraging its dominance in this critical global supply chain. 

In response, many solar installers are stockpiling inventory as a "safe harbor" strategy. However, these reserves are limited and will eventually deplete, leaving consumers vulnerable to further price increases. 

In the near term, panel prices remain stable. If you've been considering solar, now is a good time to move forward and avoid potential tariff-driven price increases.

Source: Voice of America News

Arizona Utility Rates Continue to Rise

Arizona residents will likely see more frequent utility rate adjustments following a recent Arizona Corporation Commission (ACC) policy change. The new policy, approved on December 5, 2024, allows utilities to request annual rate increases using a "formula rate plan." (Source: AZ Corporate Commission). This new approach allows for smaller, more regular adjustments rather than larger hikes every few years. While intended to prevent "rate shock," the new policy also limits opportunities for public input on rate-setting decisions. (Source: KJZZ)

Recent and expected utility rate increases include:

• Arizona Public Service (APS): In March 2024, APS raised average residential bills by about 8%, or $10.50 per month.

• Salt River Project: Effective November 1, 2024, SRP's Board of Directors approved a 3.9% increase through the Fuel and Purchased Power Adjustment Mechanism (FPPAM), resulting in an average residential bill increase of 3.2%, approximately $4.93 per month (Source:  SRP Media)
• Salt River Project: SRP has initiated a public pricing process seeking an overall 2.4% price increase, aiming to raise $168.8 million in base revenue to support power system upgrades. If approved, the average residential customer using 1,117 kilowatt-hours per month would see a 3.5% bill increase, about $5.64 monthly, effective with the November 2025 billing cycle. (Source: SRP Media)

• Increased Costs for Energy-Efficient Upgrades: With higher panel prices and weaker federal incentives, the upfront costs for installing renewable energy systems or making energy-efficient improvements may become more costly for homeowners.
• Slowdown in Renewable Energy Adoption: Financial incentives have been key in encouraging homeowners to adopt renewable energy solutions. Removing these could slow the transition to cleaner energy sources.

Recommendations for Homeowners

Given the potential policy changes and local rate increases, homeowners should consider the following actions in order to maximize their return on a potential solar panel or solar battery addition:

1. Act Promptly: If you're planning energy-efficient home improvements or renewable energy installations, initiate these projects as soon as possible to take advantage of existing tax credits and panel pricing before any policy changes are enacted.
2. Stay Informed: Keep abreast of policy developments and utility rate increases to understand how changes may affect your monthly budgets and eligibility for solar incentive programs.
3. Consult Professionals: Engage with tax advisors and energy consultants to navigate the evolving landscape and make informed decisions about home energy investments.

Conclusion

The future of solar incentives and energy pricing is uncertain, but one thing is clear: the cost of inaction may increase in the coming weeks and months. We will do our best to keep you apprised as new information is made available.

In the meantime, don’t wait for policies to change or prices to spike—take control of your energy future today. Reach out to a solar provider and secure your savings before it’s too late.

Other Cited Sources: 

Reuters: Summit carbon project would be reassessed if tax credits repealed, attorney says Today

Reuters: Trump says anyone investing $1 billion in US will receive expedited permits

MarketWatch: Here's what Trump's pick of Scott Bessent for Treasury secretary means for taxes, interest rates and more