Congress’s tax proposal could trigger a solar crash — and raise energy prices for everyone

Autumn Johnson

Submitted photo

Eliminating the residential credit and slashing the window for utility-scale projects will dismantle a thriving industry at the exact moment we need it most. It sends the wrong signal to investors, utilities, and communities — and it guarantees higher prices in the long term.”

Solar incentives

Local solar industry faces cuts to its tax credits

Across the country, Americans are grappling with high electricity bills and increasing uncertainty about the future of our energy system. At the same time, demand for electricity is spiking — not because of population growth, but because of surging investment in data centers, artificial intelligence and advanced manufacturing.

This growth is not theoretical. It is already overwhelming grid planning models and triggering procurement delays. And instead of supporting new energy infrastructure, the reconciliation bill moving through Congress could make everything worse.

If passed as written, the bill would eliminate the federal 30% tax credit for residential solar at the end of this year and impose harsh new limits on commercial and utility-scale solar projects.

Specifically, it would revoke tax credit eligibility for any project that has not officially “commenced construction” within 60 days of the bill’s passage. That is an impossible timeline for the vast majority of utility-scale projects — many of which are already under contract. This single provision could wipe out hundreds of large-scale solar projects and throw utility procurement plans into chaos nationwide.

Meanwhile, rooftop solar is already in decline. In Arizona, we have hit our lowest installation rate since 2020. In the territory served by Arizona Public Service, installations dropped 50% last year alone. It’s not because homeowners do not want solar. It’s because the economics no longer add up. Interest rates are high. Equipment costs have risen. Tariffs on imported solar panels are skyrocketing. Utilities have slashed the value of exported power and introduced discriminatory fees that only apply to solar users.

Now, the federal government may take away the one tool that still helps customers afford solar: the 30% investment tax credit. For residential customers, that could be the breaking point. For utilities trying to meet fast-rising demand, the 60-day cutoff for utility-scale projects will be a logistical disaster. Projects take years to develop, and interconnection timelines in the West can easily stretch beyond a year. The current bill does not reflect how energy infrastructure actually gets built.

And this matters to everyone. Because if solar becomes uneconomical to deploy, utilities will be forced to procure less — or pay more. That means higher rates and delayed capacity. It also means increasing stress on an already aging grid.

Congress is on the verge of creating a perfect storm: fewer new power plants, skyrocketing demand from industry and data centers, and no room to maneuver. This is how energy crises begin.

What is more, these changes undermine American energy independence. Solar is a domestic resource. It creates long-term stability in energy pricing, especially in hot, high-demand states like Arizona. It provides rural landowners with consistent revenue and preserves land for future agricultural use. It uses little to no water — something every Western state should care about — and emits no pollution. And perhaps most importantly, it can be built quickly, scaled efficiently, and deployed strategically in areas with growing demand.

None of this should be controversial. The federal solar tax credits have long enjoyed bipartisan support. They are not giveaways — they are one of the most successful public-private partnerships in modern energy policy. They reduce costs, improve grid reliability and ensure developers and homeowners can plan with confidence.

Eliminating the residential credit and slashing the window for utility-scale projects will dismantle a thriving industry at the exact moment we need it most. It sends the wrong signal to investors, utilities, and communities — and it guarantees higher prices in the long term.

We urge lawmakers to reconsider. This bill, as written, will not stabilize the grid. It will not lower costs. It will not ensure the energy needed for AI, manufacturing and future economic growth. What it will do is create a vacuum — one that slows down development, threatens reliability and makes energy more expensive for American families and businesses.

Congress should extend the tax credits, not destroy them. Protect the tools that keep energy prices low, projects moving forward, and our infrastructure aligned with our future. The stakes could not be higher.

Editor’s note: Autumn Johnson is executive director of AriSEIA, the Arizona Solar Energy Industries Association, a Scottsdale-based nonprofit trade association. Please send your comments to AzOpinions@iniusa.org. We are committed to publishing a wide variety of reader opinions, as long as they meet our Civility Guidelines.