Clouds Lie Ahead For Solar Investment Under Trump. But Skies Could Clear For Hybrid Energy Policy

Over the past four years, the commercial solar industry has been on cloud nine as a wave of federal and state investment took the industry to new heights. 

President Joe Biden’s 2022 landmark clean energy bill, the Inflation Reduction Act, restored a 30% investment tax credit for solar energy systems installed between 2022 and 2032. It also introduced two bonus credits, each offering up to an additional 10%, for projects that meet specific criteria.

The boosts helped lead the commercial solar market to a record third quarter, driving 13% expected growth in 2024, according to the Solar Energy Industries Association. 

But an incoming presidential administration with unpredictable energy policy could plunge the burgeoning industry into darkness if it axes the federal tax credits instrumental to the sector’s growth or shifts federal investment priorities to nonrenewable energy.

“Solar has been on a major growth trajectory as a percentage of our nation's electrical generation capacity,” said Alexandra Cooley, chief investment officer and co-founder of Nuveen Green Capital. 

Industry stakeholders who spoke to Bisnow said the future is uncertain given President-elect Donald Trump’s decidedly differing energy policies, with a variety of scenarios to consider, including a business-forward rebranding of Biden-era policies and a future where clean energy and fossil fuels coexist.

The most dire situation would be a rollback of the 30% tax credit, which the solar industry relies on to make deals pencil, said Shaun Keegan, CEO at Solar Landscape, a commercial and industrial rooftop solar developer.

Federal tax incentives make up a significant portion of the capital stack, and they would be hard to replace while sustaining the growth of the solar industry, though state incentives and commercial property assessed clean energy financing also contribute to the pie. 

“Without the baseline investment tax credit, our industry would be at risk,” Keegan said. “You'd still see projects, but the industry would stall and absolutely shrink if they just took it away overnight. … The future of the industry depends on the baseline credit.”

Still, Keegan, whose company secured $847M in solar project investment and financing in 2024, said he believes that worst-case scenario is unlikely.  

Despite Trump proclaiming on the campaign trail that green energy is a “scam” and vowing to dismantle the IRA, stakeholders who spoke to Bisnow mostly envision a possibility for investment across all energy sectors. This across-the-board investment would be driven by increased energy demand, a presidential Cabinet with split energy priorities, and visible success from IRA investment in Republican states and districts, they said. 

“Something that the IRA did, that it demonstrated well, was that climate policy can be industrial policy — and really good industrial policy, which supports business growth and economic growth within regions and nationally,” said Manann Donoghoe, senior research associate at Brookings' Center for Community Uplift.

“Business leaders have seen the benefits of that. Not because they care or are invested in clean energy — maybe they are — but because it's helping them grow their businesses. There's an economic bottom line there.”

The average commercial building can reduce energy bills by 30% to 50% with the installation of solar panels. Businesses that invest in solar see an average payback period of three to seven years, according to the Solar Energy Industries Association. 

Cooley, whose company provides C-PACE financing to commercial building owners that want to install renewable energy, said those she works with are focused on how energy efficiency can bolster investment returns.

She expects to see more traditional real estate investors choose C-PACE financing, not necessarily because they are focused on hitting certain environmental, social and governance targets but because they think energy-efficient projects will perform better. 

“They're more resilient in extreme weather, which is a reality that we live in,” Cooley said. “They have more certainty around their operating costs, which I think becomes an increasing competitive advantage in a high-volatile environment.”

Demand for the projects continues to break records. The commercial solar market saw significant growth in the third quarter, installing 535 megawatts direct current — a 44% increase compared to the same period last year and a 17% rise from the previous quarter. Megawatts direct current, or MWdc, measures the raw power output of solar panels before the output is converted into usable electricity for homes and businesses.

It is unclear if an administration that brands itself as pro-business would pursue policies that could hurt profits and raise taxes, said Marc Reisler, a principal at the New York-based environmental law firm Sive, Paget & Riesel. 

“You know how these things are. There’s some sign that says, ‘Future site of big solar module plant.’ Do you really want to have a sign over that that says, ‘Canceled’?” Reisler said. 

Complicating factors include the disproportionately large federal investment that Republican House districts are slated to receive from the IRA compared to Democratic House districts. The Biden administration had announced about $206B in clean technology investments as of April, with $42B set for Democratic districts, and about four times as much, or $161B, set for Republican districts, according to Bloomberg. 

Early signals from key Republicans indicate that a swift repeal of the IRA seems unlikely, even though the party will control the House, Senate and presidency. 

House Speaker Mike Johnson said in September that it wouldn’t be possible to strike down the entire IRA. Instead, lawmakers should take a more careful approach to rolling back portions of the law, he said.

“You’ve got to use a scalpel and not a sledgehammer, because there’s a few provisions in there that have helped overall,” he said at the time. 

Johnson added, however, that most of the law was “terribly harmful to the economy.”

Keegan said his business has contingency plans for worst-case scenarios, but he isn’t unduly concerned about the sledgehammer Johnson alluded to. 

“Anybody who really follows this stuff I don't think is concerned with the sledgehammer effect at this point,” he said. “But some of the things on the edges, like the tax credit adders, the sooner sunset [of environmental policies], that sort of thing, that could be in play. Like minds could differ there, but I do think it would be wildly unpopular politically.” 

An added political snag to rolling back policy could be a potential ideological split on clean energy from some of Trump’s proposed federal appointees, Donoghoe said. Both Robert F. Kennedy Jr. and Elon Musk, two of Trump’s potential picks, have advocated for green policies in the past, while Lee Zeldin, Doug Burgum and Scott Bessent are “very IRA,” he said. 

Industry backers of the Republican Party may also object to removing investment tax credits, Donoghoe said. 

“I'm optimistic that maybe there'll be a scenario where there's hand waving about cutting these credits, but the reality of doing so, there's actually a lot more political hurdles,” he said. “I think the administration may realize that when they go to make those changes.”

Given growing energy demand as a result of an explosion of data center development and power-hungry artificial intelligence, the administration might not have to pick between investment in nonrenewable resources and clean energy, industry players said. The country may need both.

Looking ahead at the impacts of AI on the power grid, there will be a huge need for investment across all energy types, Cooley said. More congested areas throughout the country could find it increasingly important to incentivize efficiency in the power grid, she said.

The narrative around the investment would likely look different, shifting from a goal to help decarbonize the American economy to helping build American industries, Donoghoe said.

Additionally, the administration may talk less about clean energy and more about energy broadly, he said. 

“Maybe you have a scenario where you’re getting everything all at once,” Donoghoe said. “Where there's renewed investment into the oil and gas industry, there's the opening up of new reserves at the same time as you have — maybe a little more quietly — investment continuing in renewables. So instead of one going down while the other is going up, maybe there's continued investments in both.”