Community solar provides clean energy to residential ratepayers as well as business owners by letting them subscribe to a portion of an off-site solar facility’s generating capacity, for which they receive credit on their utility bills.
The draft budget of the House Ways and Means Committee includes an early phase-out of the 48E Investment Tax Credit (ITC) and the 45Y Production Tax Credit beginning in 2029. Any projects not placed in service by December 31, 2028 will qualify for lower credit amounts. The phase-out was originally designed to begin in 2031, but the proposed budget calls for it to be phased down 40% in that time, and down to zero the following year.
Jeff Cramer, president and CEO of the Coalition for Community Solar Access (CCSA) sees scaling back the ITC as reducing access to local power and dismantling the progress that has been made.
The House proposal to scale back the Investment Tax Credit (ITC), now under consideration by the Ways and Means Committee, threatens to dismantle one of the most effective tools for advancing American energy independence and local economic growth. For decades, the ITC has spurred private investment in clean energy—lowering costs for families, supporting small businesses, and expanding access to local power in communities across the country.
According to a recent report by Wood Mackenzie in collaboration with the CCSA, community solar can benefit low- to moderate-income (LMI) ratepayers, as strongly evidenced in New York and Massachusetts. The two states combined make up nearly half of the 1 GWdc of LMI-serving community solar. According to the report, this emphasizes the reliance on both state and federal incentives to boost LMI capacity. The report estimates that LMI subscribers currently account for 14% of community solar capacity.
While distributed solar dropped possibly by as much as 30% in 2024, Ohm Analytics’ data shows that community solar bucked the trend in the fourth quarter, surging 72% year-over-year.
Cramer notes that community solar has been a “powerful engine for economic opportunity in both urban and rural America.” Not only does community solar serve renters or those who can’t afford the upfront cost of putting solar on their roofs, it also provides clean energy for small businesses and farms. “From family farms leasing land for solar arrays to working families seeing real savings on their utility bills, community solar has delivered results where traditional models have fallen short,” he said.
The proposed budget threatens to scale back an industry that is contributing to the “all-the-above” energy strategy. A study conducted by PA Consulting for National Electrical Manufacturers Association (NEMA), “A Reliable Grid for an Electric Future,” predicts that growth in electricity demand in the United States will be driven by data centers and e-mobility, along with industrialization and connectivity.
“Now is not the time to scale back the very policies that are helping us meet that demand with American-made energy,” Cramer said. “The ITC is precisely the kind of market-based mechanism that aligns with conservative principles: it leverages private capital, creates jobs, and strengthens energy resilience without government mandates.”
In a recent webinar, Debra Phillips, NEMA president and CEO noted that increased demand on the U.S. electrical system requires an all-above-approach, which she said should “focus on investing in innovative technologies and prioritizing policy and regulatory certainty that will help us create the reliable and affordable energy system of the future.”
Cramer echoed this sentiment, stating that the proposed budget “threatens to undo hard-won gains, disrupt billions in private investment and inject uncertainty into markets just as our energy reliability is being tested.”
“An all-of-the-above strategy that includes community solar and distributed generation is essential—not just for grid reliability, but for American energy security and global competitiveness,” Cramer said. “We urge Congress to work with industry leaders to protect local, affordable energy solutions that power our economy and strengthen our communities.”
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