As we navigate a new administration, Arch will continue to provide updates. While solar is impacted by politics, the investment to save money and produce clean energy is something we can all get behind.

Arch has seen political landscapes change over the last 20 years, and we are here as your local energy experts to work through any scenarios or questions you have.

What does a Trump presidency mean for solar?

Instead of focusing on big statements like “drill, baby, drill” made on the campaign trail, let’s dive into specifics that would impact the national solar industry

Supply Side

A big question mark with a Trump presidency is how he will manage the international supply chain that is fueling the global boom in renewable energy.

In his first presidency, Trump expanded tariffs on non-American solar equipment. These tariffs were originally implemented under Obama to encourage domestic manufacturing of solar panels and other materials. Following Trump, President Biden passed the Inflation Reduction Act (IRA) to further incentivize “Buy-American” provisions and “domestic content” requirements for federal incentives. In many ways, the last three administrations have been aligned in their approach to encourage American manufacturing of renewable tech and ween the industry off cheaper solar panels made in Southeast Asia, particularly China.

In short, we shouldn’t expect a change in direction of supply chain approach, but we may see Trump pursue a quicker adoption of domestic supply chain for American solar. The result for consumers could be a short-term increase in the cost of materials (and total system cost) as access to affordable global markets is hit by tariffs and the American market is still ramping up to meet market demand affordably. A long-term outcome would be the possibility that solar systems installed in the later part of the 2020s would be manufactured with materials all made by American labor.

Creating domestic jobs to supply renewable energy has been supported across the aisle. While policy names may be different, we expect this administration to continue divesting from foreign production and support more American labor.

Incentives  

For many Americans that work in the solar industry, the immediate concern is for the incentives that came in under the IRA, such as the Federal Investment Tax Credit (ITC). Passed in 2022, the ITC locks in federal incentive rates for 10 years, allowing homeowners and businesses to claim a percentage of the cost of their solar system as a credit on their taxes (with caveats and provisions). This is one of the main mechanisms that puts money in the hands of Americans trying to go solar.

Analysis from the Solar Energy Industry Association projects that the IRA will result in $144 Billion dollars of private investment in solar by 2033. As a result of how effective the ITC has been, many industry analysts are confident that the critical solar ITC will not be repealed. Much of the wealth is flowing into areas represented by Republican legislators who will not want to disrupt the burgeoning green economy growing in their districts.

Of greater concern is the more vulnerable solar incentive in the form of the US Department of Agriculture’s Rural Energy for America Program (REAP). REAP has been a pivotal part of the IRA’s goal to promote renewable energy jobs in rural areas, breathing life into the former Rust Belt states.

Despite a strong 21-year history, REAP has failed to garner significant political support that can champion it under a more critical administration. Because the funds offered by REAP are direct access funds and large amounts of it are currently unallocated (and thus “up for grabs”), REAP may be the first target for a new administration to direct funds away from renewables and toward other areas with minimal political fistfights required.

The ITC 30% tax credit has support from both parties, so it may remain. Other sources of funding for renewables, like the REAP program, could be in danger.

Regulation  

Lastly, there is the aspect of governance and regulation at the federal level that oversees the growing American solar industry.

A consistent theme of Trump’s most recent campaign has been slashing and streamlining government regulations. Unfortunately, the regulatory outlook is both the murkiest road ahead and the one with the greatest number of possible outcomes.

Until the Trump administration is firmly back in the White House and key roles in the government have been filled, we can’t speculate on what goals and framework they will implement.

Many industry analysts are expecting the appointment of a so-called “Energy Czar”, which could lead to significant retooling of the regulatory landscape. Or, rather than rolling out a whole new batch of regulations, the Trump administration could streamline and simplify existing regulations put in place over the previous decade with the goal of increasing renewable adoption by removing bureaucratic obstacles.

With such a broad range of possibilities, it’s hard to decipher what the regulatory landscape will look like. Some changes take time to approve, while others could be immediate. We believe there is slight urgency to pursue your solar project in the next 6-18 months if you would like to take advantage of current rules and regulations.