Selling residential solar after ITC expiration

With the Investment Tax Credit (ITC) expiring in just a little over two months, U.S. residential solar installations have been booming. Aurora Solar conducted a survey, the findings of which answer the question of what will happen to residential solar sales once the ITC expires.

The report, What homeowners think of solar as the federal tax credit winds down compiles the responses from 1,000 adults who were asked about their perceptions of solar costs, incentives, and savings, as well as their likelihood to consider installation in the next year.

A misconception within the solar industry has been that the expiration of the ITC will drive people away from residential solar. However, the Aurora survey found that one in three had never heard of the ITC at all; 43% reported hearing of it but didn’t know how it worked. Among those who reported that they are aware of the ITC, 82% underestimated its value, believing it was less than a 20% tax credit when it was actually 30%.

For whose who are aware of the ITC:

Another gap in understanding was discovered when 37% of respondents say they know nothing about the installation process. The Aurora report notes that “this knowledge gap presents a crucial opportunity for installers to step in as trusted educators and guides.”

The survey revealed that cost is also a mystery for many of the respondents. Over one-third believe solar is cheaper than it really is. Nearly one in ten think it costs less than $5,000 to install, while the average residential system costs between $18,000 and $43,000 before incentives, according to Consumer Affairs.

Most survey respondents (78%) underestimate how much solar can reduce their monthly electric bills. Over one-third think they’d only save $50 per month, but SEIA estimates it’s much closer to $125 per month.

While 39% of low-income households say they wouldn’t even consider solar, among households earning $100K and more, that number drops to 13%. Of those open to solar, 35% say they’d rely on government incentives, while 22% say they could pay upfront in full. Millennials and Gen Z respondents are more likely (67%) to purchase or finance solar; however, they are financially constrained and likely to be motivated by flexible financing and transparent cost education.

The key takeaways from this study are that because so many homeowners are unaware of the tax credits or their value, the expiration of those credits isn’t a deal-breaker for these potential customers. Installers now have an opportunity to educate homeowners on the costs and benefits of going solar, and to do so, they should sharpen their knowledge of state-level incentives.

“The most troubling paradox this study shows is that Americans are eager for the financials of solar to improve, from lower interest rates to better incentives, while simultaneously failing to understand just how beneficial the expiring Investment Tax Credit is and how much they could be saving with solar right now,” Fox Swim told pv magazine USA. “That’s why installers’ top priority needs to be leading with transparency when approaching a potential new customer — showing homeowners what solar really costs, how much it truly saves, and why the clock is ticking.”

The survey was conducted online of adults in the United States age 25 and older, representing a balanced cross-section of regions, income levels, and homeownership status, according to Aurora.