By Jennifer Hiller

The struggling rooftop solar industry faces a potentially fatal blow after the House of Representatives passed a tougher version of President Trump's expansive tax-and-spending package.

The bill sunsets rich renewable energy credits, as expected -- but includes more stringent provisions and rollback dates that were seen as especially bleak for rooftop solar. Credits for rooftop solar and battery storage would end this year, while those for larger solar, storage and wind energy projects would end by 2028, instead of a slower phaseout through 2031.

"I think this is basically shutting down the industry," said Gregg Felton, chief executive of Altus Power, which develops solar projects on rooftops, in parking lots and other spots of high power consumption. "Nobody will invest any longer in this space with this version of the law."

Kashy Harrison, an analyst at Piper Sandler, said the bill would "mark the end of the U.S. residential solar as it exists today." Joseph Osha, of Guggenheim Securities, called the revised language "disastrous for the residential solar industry."

Further changes to the bill are likely when it goes to the Senate, where Republicans have a 53-47 majority. GOP lawmakers are aiming to get the bill to Trump's desk by July 4.

Stocks tumbled across the sector.

Sunrun, which provides solar and battery storage systems mostly for homes, plunged 37%. Inverter and battery provider SolarEdge Technologies fell 25%. Enphase Energy, which supplies microinverter-based solar and battery systems, dropped 20%

Mary Powell, chief executive of Sunrun, said the House bill doesn't give the industry time to adjust, as would normally happen with tax law changes. "This clear and simple rug pull for the entire industry does not do that, and there's not a glide path through 2028," Powell said.

She said she hopes the Senate hears the message that home solar and storage benefit the electric grid and at times of stress can be tapped as a resource.

"We're also working every day to bring energy independence to main street America," Powell said. "We know what we do is very, very aligned with what the administration wants."

Tax credits for wind, solar and battery storage projects were enacted in President Joe Biden's landmark 2022 Inflation Reduction Act, which Trump has called the "green new scam."

Rolling back those provisions would raise about $500 billion in revenue over a decade, according to the Joint Committee on Taxation. That includes targeting tax credits that buyers have used for home-energy projects and for lowering the cost of switching to an electric vehicle.

The fight over clean energy comes as the power industry grapples with meeting electricity demand that is rising for the first time in a generation. The growth is largely due to the mania over artificial intelligence and rush to build data centers.

In practice, developers and business groups say the tax-credit rollback is immediate, unless projects are under construction or about to begin.

Meanwhile, an earlier version of the bill rolled back the rooftop solar credit for people who own their systems but left it in place for leased systems. Both groups lost the credit under the bill that passed the House. Osha, the Guggenheim Securities analyst, estimates about 70% of the residential solar industry is supported by leasing or other financing arrangements.

"For the good of our country's energy security and energy bills -- this cannot stand," Jason Grumet, chief executive of the industry group American Clean Power Association. "We urge the Senate to reject the strident House approach and pass a reasonable energy policy for the American people."

The rooftop solar business was already swimming in troubles before Thursday's vote. Cuts to incentives in major markets like California have reduced the amount of money that rooftop solar systems can get for selling excess electricity back to the grid. That increases the number of years it would take to recoup the cost of investing in a system.

Higher interest rates have created a separate one-two punch: Companies use debt to fund installations, and customers also tend to finance their purchases.

Sunnova, one of the largest rooftop solar panel installers and financiers in the U.S., said in April that it was negotiating a debt restructuring with its creditors. The Wall Street Journal has since reported that the company is preparing a bankruptcy filing. Last year, competitor SunPower filed for chapter 11.

Write to Jennifer Hiller at jennifer.hiller@wsj.com

(END) Dow Jones Newswires

May 22, 2025 17:52 ET (21:52 GMT)

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