Residential solar is under siege: Why we’re fighting back on Capitol Hill

The halls of Congress have been buzzing with clean energy conversations this month, and EnergySage has been right in the thick of it. We've been meeting with lawmakers to make the case that the residential solar tax credit (Section 25D of the U.S. Tax Code) needs to be preserved beyond this year.

Last week, we teamed up with installers who represent the thousands of small businesses that would be directly impacted if the credit were cut. This week, we're back with an even broader coalition—more installers, solar financing companies, manufacturers, and industry trade associations like the Solar Energy Industries Association (SEIA).

Why the urgency for this fight? The residential solar tax credit is set to be eliminated at the end of this year, a full decade ahead of its original schedule. That's a problem we can't afford to ignore.

America's electricity demand is surging like never before, driven largely by AI data centers that require massive amounts of power. Residential solar represents our best opportunity to get more energy online quickly to avoid demand-related blackouts.

While utility-scale energy projects can take years to plan, permit, and build, homeowners can have solar panels generating clean electricity in a matter of weeks or months. And with battery attachment rates surging—45% of solar installations nationwide now include battery storage according to our most recent report—these residential systems are directly supporting grid stability.

As we've previously covered, other forms of energy simply won't be able to deploy fast enough to meet this surging demand. Residential solar fills that gap—and it does so while creating benefits that extend far beyond the homeowner's electric bill.

One of the biggest misconceptions about residential solar is that it only benefits the people who install it. The reality is quite the opposite:When your neighbor puts solar panels on their roof, your electric bills benefit too.

That's because residential solar generates power right where it's needed, reducing strain on the aging U.S. electric grid (especially when paired with batteries) and helping utilities avoid firing up expensive "peaker" power plants during high-demand periods. Those peaker plants are some of the most costly sources of electricity. Avoiding having to use them keeps utility rates lower for everyone—not just solar customers.

The need for Senate and House consensus to pass the budget bill means difficult negotiations are ahead. Right now, it seems like the Senate is willing to sacrifice the residential solar tax credit to get the bill over the finish line. We're trying to show them why we can't afford to lose the credit this abruptly.

The residential solar industry supports over 100,000 jobs. The vast majority are installers working for small, local businesses found in every state across the country. Eliminating the 25D credit would wipe out around 62,000 American jobs by the end of this year, and almost 200,000 next year, according to SEIA. Our recent survey of over 150 solar installers backs this up: 92.3% of installers said cutting the tax credit would dramatically harm or harm their businesses, with nearly 6% saying they would exit the industry entirely.

Installers can figure out how to adapt their businesses if given a reasonable amount of time. But cutting the tax credit abruptly at the end of this year doesn't provide enough runway to avoid many negative consequences. These aren't abstract numbers—they represent real families and communities that have built their livelihoods around helping Americans access clean, affordable energy.

The impact extends far beyond jobs. Domestic manufacturing of solar equipment has been growing rapidly, but without the consumer demand that the residential solar tax credit drives, this progress will stall.

According to SEIA, over 28 GW of new domestic solar panel manufacturing came online in 2024, and over the past few years dozens of power electronics and racking manufacturers have announced new or expanded U.S. production. Without sustained residential consumer demand for solar, this will likely backfire and drive installers to source from the cheapest possible places, undermining the very goals policymakers are looking to achieve.

Earlier this month, 13 House Republicans urged the Senate to improve clean energy tax credits—but residential solar didn't make the cut. The Senate Finance Committee's bill revisions followed suit. While other clean energy provisions have well-funded industry advocates pushing for their preservation, residential solar's backbone—thousands of small, local installers—simply don't have the same lobbying power in Washington.

The solar industry isn't asking to keep this tax credit forever. We're asking for a sensible phase-out that doesn’t destroy jobs and years of investment while giving companies and homeowners time to adapt. A gradual step-down would provide the certainty these small businesses need to continue serving their communities and local economies.

Residential solar isn't just about helping individual homeowners save money—though that remains a crucial benefit as families continue adjusting to inflation and overall economic uncertainty. It's about maintaining American energy independence, supporting domestic manufacturing, and ensuring we have the grid resources to power the technologies that will drive our economic future.

These conversations aren't easy. Deficit concerns are real, and some lawmakers still view residential solar as a luxury for the wealthy rather than the small business engine and reliable power resource it has become. But every installer who shows up to these meetings, every job success story we share, and every data point we present helps build the case for why our industry can't afford to lose this vital tax incentive so abruptly.

The stakes couldn't be higher. If we're going to win the AI race, maintain our energy dominance, and support the hundreds of thousands of Americans who have built their careers around clean energy, we need to get this right.

EnergySage will continue to travel to Washington, build coalitions, and fight tirelessly for policies that support American families, small businesses, and our clean energy future—because when it comes to energy independence and economic opportunity, there's too much at stake to give up on residential solar now.