What Is the OBBB?
The "One Big Beautiful Bill" (OBBB), signed into law on July 4, 2025, represents a sweeping overhaul of U.S. energy and tax policy. While the bill covers a broad range of topics, its most significant and immediate effects are felt in the clean energy sector—especially solar. The OBBB accelerates the rollback of federal incentives that have fueled the rapid growth of solar energy in the United States over the past decade.
Key Changes for Solar
1. Accelerated Phase-Out of Solar Tax Credits
- Residential Solar (Section 25D): The 30% federal tax credit for residential solar systems will expire on December 31, 2025—seven years earlier than previously scheduled under the Inflation Reduction Act (IRA).
- Commercial and Utility-Scale Solar (Section 48): Projects must begin construction within 12 months of the bill’s passage or be placed in service by the end of 2027 to qualify for the full credit. After 2027, the credit is rapidly reduced and eliminated entirely by 2029.
- Battery Storage: The tax credit for battery backup systems, whether installed with solar or standalone, is also eliminated after December 31, 2025.
2. Stricter Rules and Deadlines
- Projects that do not start construction by the new deadlines face steep reductions or total loss of tax credits.
- New restrictions target the use of equipment from "Foreign Entities of Concern" (FEOC), further complicating project planning and supply chains.
3. End of Other Clean Energy Incentives
- The OBBB also repeals credits for home energy efficiency improvements and new energy-efficient homes, further reducing incentives for decarbonization at the residential and community level.
Immediate Impacts on the Solar Community
For Homeowners
- Rush to Install: There is now a rush among homeowners to install solar and battery systems before the end of 2025 to take advantage of the expiring tax credits.
- Reduced Affordability: Without the 30% tax credit, the upfront cost of solar will rise, making it less accessible for many families, especially those in lower- and middle-income brackets.
- Uncertainty: The abrupt policy change creates confusion and uncertainty for consumers considering solar, as well as for those with projects in progress.
For Installers and Developers
- Project Cancellations: The shortened window for tax credits is expected to lead to project cancellations and a sharp drop in new installations after 2025.
- Job Losses: Industry groups warn that up to 330,000 jobs and hundreds of U.S. factories are at risk due to the sudden contraction in demand.
- Business Closures: Smaller contractors and local installers, who rely heavily on residential projects, are likely to be hit hardest.
For the Broader Industry
- Market Contraction: Analysts predict a significant contraction in the U.S. solar market, with new capacity additions potentially dropping by as much as 70 GW by 2030 compared to previous projections.
- Higher Energy Costs: The rollback of solar and wind incentives is expected to raise household energy costs and slow progress toward emissions reductions.
- Shift in Investment: With federal support waning, the focus may shift to state and local initiatives, as well as private financing, to sustain clean energy growth.
The Road Ahead
While the OBBB represents a major setback for federal clean energy policy, it also highlights the resilience and adaptability of the solar community. Local governments, industry advocates, and clean tech innovators are expected to play a larger role in advancing sustainability and energy independence in the absence of strong federal incentives.
Key Takeaways:
- The OBBB ends the 30% solar tax credit for homeowners after 2025 and phases out commercial credits by 2029.
- The solar industry faces a period of contraction, job losses, and increased uncertainty.
- Homeowners and businesses must act quickly to benefit from remaining incentives.
- The future of solar in the U.S. will depend more on local action and market-driven solutions as federal support recedes.
The solar community is entering a new era—one that will test its ability to innovate, adapt, and continue driving the clean energy transition despite shifting political winds.
