Want Cheaper Solar Panels, Home Batteries or a Heat Pump? Better Act Soon
(Bloomberg) -- The Republican-led US Senate’s passage of legislation to eliminate incentives for clean energy means homeowners likely have until the end of the year to install solar panels, batteries and heat pumps before costs soar.
The bill must still be reconciled with the House of Representatives version and signed into law by President Donald Trump. But the Senate action has dashed advocates’ hopes that it might restore some Inflation Reduction Act (IRA) subsidies, or at least give people more time to claim a 30% tax credit on the five-figure cost of installing rooftop solar and home battery storage systems. The Senate bill terminates those subsidies, along with a $2,000 tax credit for buying heat pumps, after Dec. 31 and repeals a $7,500 tax credit for the purchase of some electric vehicles after Sept. 30. A loophole that allowed carmakers to pass that savings to customers who lease EVs also would end then.
“The repeal of the credits takes away an option for households to gain not just climate friendly appliances but appliances and systems that effectively enabled them to cut their energy bills,” said Ari Matusiak, chief executive officer of Rewiring America, a nonprofit that advocates for community electrification.
He noted that 3.4 million households claimed IRA tax credits in 2023. Matusiak said the subsidies’ original expiration in 2032 gave homeowners long-term assurance that when a fossil fuel furnace or water heater suddenly failed, they would receive financial help to replace them with high-efficiency but more expensive electric versions and could install subsidized solar panels to power the devices.
Now with those tax credits disappearing, homeowners and installers are scrambling.
Martyna Kowalczyk, chief executive officer of Solartime, a family-owned Dallas area solar installer, said she’s been interviewing prospective project managers to handle an expected influx of customers in the coming months. “I am trying to prepare for the rabbit race,” said Kowalczyk. “Everyone who is considering solar will try to get in this year. And next year will be a drought.”
For homeowners, there’s reason to rush to their local installer. The tax credits would save more than $10,000 on an average $35,000 system. Most solar panels and home batteries are imported and their cost is likely to rise due to US tariffs.
But the looming deadline to claim the tax credits means it’s crucial to choose an installer with the capacity to design a rooftop array and battery system, obtain the necessary permits and complete the job in a matter of months. Under the House version of the tax legislation, only systems installed and “placed in service” by a utility before the tax credits’ expiration qualify for the incentives.
That raises an issue beyond the control of the installer — the time it takes for your local utility to connect a completed solar array to the grid. In Northern California, for instance, utility Pacific Gas & Electric says it usually flips the switch on a new solar system in five to 10 business days but the process can take up to a month.
The Senate bill softens the blow a bit by deleting the “placed into service” requirement. But homeowners would have to pay for solar and battery systems by Dec. 31 to be eligible for the tax credit.
The risk is that delays push completion and activation of a solar and battery array beyond the deadline to claim tax credits and a homeowner is left on the hook for the full cost of the system.
Other factors to consider include the age of your roof and whether it needs to be replaced before installing solar panels. Also, make sure your home’s electrical panel has sufficient capacity to accommodate a solar and battery system or heat pumps.
Even before the tax bill, A1 Sun, a Berkeley, California-based installer, was already booked through the end of 2025. “We are placed in the unfortunate position of both not being able to take advantage of any sort of ‘gold rush’ for new contracts this year, and also having a lot of anxiety about being able to meet our commitments to install those customers who already had contracts in place,” said Reuben Ly, sales manager for family owned A1 Sun.
“It’s just pulling the rug out from underneath us,” he said of the tax bill.
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