Bracing for Impact: Biz leaders uneasy about federal bill’s effect on solar industry

As the U.S. Senate considers the federal budget reconciliation bill, dubbed the “One Big Beautiful Bill Act,” narrowly passed by the House last month, local solar energy company leaders have concerns over what they say are potentially devastating negative impacts on the industry.

Senators are still working through language of the Republican agenda bill promoted by President Donald Trump that will extend and expand the 2017 tax law, costing roughly $3.8 trillion. Spending cuts in other areas, such as clean energy tax credits, are being sought to offset the cost.

The version of the bill approved by a 215-214 vote in the House eliminates the Energy Efficient Home Improvement Tax Credit, which allows residents to get 30% – up to $3,200 – off the cost of new clean energy projects, including solar panel systems. It also would end a 30% tax credit for companies that lease solar panel systems to homes and businesses.

The legislation could jeopardize hundreds of thousands of solar and storage jobs nationwide if the Senate decides not to change the House-passed elimination of clean energy tax credits, according to a report by the Solar Energy Industries Association. Data from the national trade organization shows that 330,000 current and future jobs by 2030 across the country could be at risk if the reconciliation bill is enacted without changes. Roughly 3,800 of those would be in Missouri.

Solar jobs have been on the rise in Missouri, according to the Interstate Renewable Energy Council, as it employed 3,073 as of 2023 – a 6.2% year-over-year increase.

At Solera Energy LLC, which employs 47, Chief Operating Officer Ryan MacDonald said there needs to be a step down to where the solar industry can wean off the tax credits over a few years rather than just eliminating them. He said the company has numerous projects in the works, including a large 3.5-megawatt solar system installation in Gravette, Arkansas.

“This project is assuming a 30% tax credit, and if that tax credit goes away, then this project is essentially (dead on arrival),” said MacDonald, who also is board president for SEIA affiliate Missouri Solar Energy Installers Association. “Now there’s talk right now extending (tax credits) to where (a project) has to be installed by 2028. But until something is completed with Trump’s ‘Big Beautiful Bill,’ we’re not going to know where this project stands.”

Industry concerns
Additionally, MacDonald said the project’s cost is likely to rise amid Trump’s escalating trade war with China. In April, Trump raised the tariff on Chinese imports to 125%. An International Energy Agency report in 2022 said China accounts for at least 80% of solar panel components, such as polysilicon and solar cells.

“The tariff increases are looking to cost us between $750,000 to $1 million in additional material that we were not prepared for,” MacDonald said, noting the company has already invested over $300,000, including engineering and designs, into the project. “What it does is it potentially makes that project unviable.”

Tariffs on imported solar cells and modules are nothing new, said Caleb Arthur, owner and CEO of Springfield-based Sun Solar LLC. He said Trump also imposed tariffs on China for those products during his first term.

Despite the tariffs, China continues to export a high supply of solar panels to the U.S., Arthur said, which remains a contributing factor to why he has no intention to launch a manufacturing plant anytime soon after announcing plans to do so in 2023, according to past Springfield Business Journal reporting. He said last year he was delaying the project.

“I’m hearing still to this day there is a year’s worth of oversupply of solar panels in warehouses around the United States,” Arthur said. “Part of that is China has strategically been continuing to ramp up its production of solar panels to keep guys like me from being able to get into this solar panel manufacturing business. They are intentionally driving down the cost of panels and oversupplying them in the United States, which is great for consumers that want affordable solar systems, but it also makes it a little hard to ever create new competition.”

As for the impact the House version of the bill could have on local jobs, MacDonald and Arthur both said their companies could survive – albeit with significantly reduced workforces.

“We have projects that we sold yesterday that won’t be installed for another three or four months,” MacDonald said. “If that bill went forward, I mean there’s a good chance that we would either lay off 90% of the staff and manage what we have with a very limited skeleton crew or decide that it just doesn’t make sense.

“We’ve run a pretty conservative business that we could go on for quite some time, but for a lot of businesses out there, it doesn’t make sense to continue fighting over a sliver of the pie.”

Arthur, whose company has 123 employees including around 85 in Springfield, said he’d expect to shed dozens of jobs and might move his headquarters to Illinois, where Sun Solar also has an office. He said Illinois’ energy incentives, which include solar renewable energy credits, are superior to Missouri.

“My plan is if the credits completely disappear, I’m going to just keep working my company as efficient as humanly possible,” he said. “It might mean that I go from 120 employees to 50 or 60 and then I’m fully in Illinois. Even though I love living here, I think the reality and writing on the wall is that states like Illinois will continue to put in their own incentives for people to go solar and the state of Missouri will just look the other direction.”

Supporters of the bill point to the cost of the federal tax credits as a reason to eliminate them.

The nonpartisan Committee for a Responsible Federal Budget estimated in early June that dropping the clean energy investment, production and manufacturing tax credits will save roughly $249 billion over the next decade.

Over at City Utilities of Springfield, a power supply project could also be impacted by the federal bill’s passage. CU previously estimated a $75 million price tag for 36 MW of battery storage within its system. Officials said in September 2024 that CU is eligible for cost-share provisions through the Inflation Reduction Act, which will reduce the overall cost of the battery project. However, the House-passed version of the bill impacts battery storage, which could put cost-share options at risk. The batteries are expected to be put into service by October 2026, according to past reporting.

Amy Derdall, senior vice president and chief financial and supply chain officer at CU, said the organization is monitoring activity in Washington, D.C.

“At this time, it’s still too early to determine the full implications for our battery storage project,” Derdall said via email. “We are continuing to evaluate how any legislative or policy changes might affect the overall project economics and timeline.”

Legislative discussion
A U.S. Senate panel in mid-June proposed a full phase-out of solar and wind energy tax credits by 2028 but extended the incentive to 2036 for hydropower, nuclear and geothermal energy, according to a draft of the bill. Like the House bill, the Senate bill eliminates consumer-facing credits for installing rooftop panels and making other energy-related home improvements.

MacDonald said he and other industry officials have been speaking with the offices of Missouri Sens. Josh Hawley and Eric Schmitt in the hopes of buying the industry more time for the utilization of tax credits.

“What I proposed to Sen. Schmitt and Sen. Hawley’s office is essentially a three- to five-year strategy to limit and wean off those tax credits,” MacDonald said, characterizing the delay as utilizing an off-ramp. “But we can’t have something one day and then it be gone literally the next day without having time to structure projects that we have three and five years down the road to get on a different strategy.”

Messages left with Sens. Hawley’s and Schmitt’s offices were not returned by press time.

MacDonald said he feels the Senate has a good grasp of what’s going on with challenges the solar industry faces. Senate Republicans face a self-imposed deadline to pass the bill by July 4.

“I do have confidence that the senators are looking at an approach that’s different from the House. It’s more of a strategic approach,” he said.

Still, MacDonald is uncertain of how the industry will emerge after the bill wrangling is complete.

“If I knew what went on behind closed doors, I would be out in Vegas making bets on that,” he said.