The solar industry was once rising. Now it’s under strain

Credit: (AP Photo/Sue Ogrocki)

WASHINGTON — The U.S. solar industry hit a record in 2023, putting the most capacity ever on domestic power grids.

Then last year, it broke that record, installing 21% more.

But under the second Trump administration and a Republican-majority Congress largely hostile to renewable energy, the industry in New Jersey and elsewhere is facing a series of barriers after years of growth, and all while it is buffeted with back-and-forth tariffs that spark international trade disputes.

Chief among these barriers is a new federal law that weakened renewable energy tax credits for wind and solar power and a recent Trump administration decision to cancel all funding from a $7 billion grant program that goes to residential solar projects for lower-income homes.

“I think it’s, coupled with the pending repeal of the tax credits, really a one-two punch that is going to make it harder for people to go solar, save money and create jobs,” Ben Delman, editorial director for Solar United Neighbors, a nonprofit advocacy group, said of the new law and the canceled grant money.

“The industry is trying to figure out where to go next,” Delman said in an interview with NJ Spotlight News. “In some ways, it feels like we’re walking backwards.”

Expiring tax credit

Changing tariffs and interest rates are also barriers for the industry, he said.

Because of a new federal budget law Congress wrote this year, a federal tax credit to help people pay to put solar panels on their homes will expire Dec. 31, instead of in 2034, almost a decade ahead of schedule.

‘The industry is trying to figure out where to go next.’ — Ben Delman, editorial director, Solar United Neighbors

For owners to qualify for the credit, which could defray about $9,000 of the up-front cost of a residential solar installation, tax experts recommend owners have their systems ready to be powered on before the year is out.

“Without the tax credit, you’re making the cost of going solar more what it was maybe four or five, six years ago,” Delman said. “We were still seeing folks able to install solar back then but not nearly at the volume that they are now.”

End of major grant program

In a big blow to new installations, the Trump administration moved last week to cancel all funding for the grant program, called Solar for All. The program was designed to connect households that could not pay for or finance their own solar panels, to solar power.

About $156 million of the total $7 billion, through the Environmental Protection Agency, had been slated for the New Jersey Board of Public Utilities to use on residential solar projects within the state. That funding has not been used.

‘It’s really disappointing and a major setback for the state.’ — Ed Potosnak, executive director, New Jersey League of Conservation Voters, said of the halted solar grants.

Two nonprofit groups, Inclusive Prosperity Capital and GRID Alternatives, each received about $250 million in grants, some of which were directed for New Jersey solar projects.

Gov. Phil Murphy, a Democrat who has pushed aggressive low- and zero-carbon energy standards during his two terms in office, called the decision to cancel the EPA funding “reckless” and pressed the administration to reverse course. “This program was estimated to help thousands of our state’s low-income households save $400 every year,” Murphy said.

The White House has repeatedly and illegally withheld and terminated federal funding Congress has approved.

Lawsuits threatened

After the EPA moved to end the solar grant funding, legal groups, including the nonpartisan Southern Environmental Law Center, threatened to sue.

“If leaders in the Trump administration move forward with this unlawful attempt to strip critical funding from communities across the United States, we will see them in court,” said Kym Meyer, the group’s litigation director.

EPA Administrator Lee Zeldin said the agency he leads no longer has the “statutory authority” to carry out the program, which he called a “boondoggle.”

“Solar is the cheapest form of energy right now” and the cancellation of the solar grant funding is “going to raise costs” for the public, Ed Potosnak, executive director of New Jersey League of Conservation Voters, said in an interview with NJ Spotlight News.

“It’s really disappointing and a major setback for the state,” Potosnak said of the halted solar grants, adding that renewable energy like solar can be harnessed locally, unlike fossil fuels. “Solar is right here in our neighborhoods and our communities.”

Rising electricity prices

Separate from ending or cutting short a series of renewable energy tax credits, the new federal law will also raise electricity prices and increase greenhouse gas emissions, according to nonpartisan experts.

Solar in 2020 became the cheapest source of electricity to install at utility scale, according to the International Energy Agency.

About 7% of the electricity mix in New Jersey came from solar power as of 2023, according to U.S. Department of Energy data, well behind natural gas (about 49%) and nuclear (43%).

Permitting solar could get easier in New Jersey if Murphy signs a bill (A-5264/S-4100) pending before him. The bill would create an online tool for towns to process permits for solar and battery projects.

That could make a difference in the state, which has the third-slowest permitting process for residential solar, according to the Regional Plan Association.

New Jersey ranks 11th in the country for solar capacity installed, and solar accounted for 66% of all new electrical sources hooked up to the grid nationwide last year, according to the Solar Energy Industries Association, a trade group.