Tag: community solar

Where Do ITC and PTC Solar Credits Stand in 2026?

Posted on by Gino Geruntino

When President Donald Trump signed the One Big Beautiful Bill Act (OBBBA) last July, sweeping changes blasted the renewable energy industry. 

For an industry seemingly finding its stride, the OBBBA was a baseball bat to the knees. Nearly every sector was impacted, including solar, and developers, manufacturers, and consumers alike suffered. 

And while it’s true that misery enjoys company, the changes leave developers and consumers scratching their heads. Unfortunately, the solar industry must now find ways to expand with less federal help. 

Tax Credits Fading Out 

At a time when AI growth is causing electricity use to soar, the solar industry lost part of its appeal. 

The OBBBA brought drastic changes to tax credits and incentives for investing in solar projects. Most notably, it shortened the sunset dates for critical ITC and PTC credits originally extended by the Biden administration. 

But where does the industry stand in 2026, and what can we do to preserve years of positive momentum? 

Residential Solar 

If any part of the solar industry took the brunt of the changes, it was the residential solar sector. 

Under the Inflation Reduction Act, homeowners were eligible for a 30% federal tax credit applied to the cost of their solar installations and battery storage projects. However, to receive the credit for a battery project, applicants had to meet several requirements, including: 

  • 3 kWh installed with a new or existing solar project 
  • Exclusive solar charging for the first year 

Most notably, the Residential Clean Energy Credit (Section 25D) ended in December 2025.  

Once the OBBBA took effect, homeowners scrambled to get solar projects installed and operating by the December 31 deadline. Those who beat the buzzer and got their projects finished weren’t fully in the clear, however. To fully qualify, homeowners had to own the system AND have an income tax liability for the tax year. 

How Did the Industry React? 

Homeowners were left scrambling when news broke that the residential ITC cliff was approaching in a matter of months. 

With a short deadline, homeowners rushed to get solar projects online to take advantage of the ITC. Projects that missed the deadline weren’t as lucky, missing out on the 30% federal tax credit. 

Despite losing a massive residential solar incentive, there is still another way to qualify for savings. If they choose to, residents can invest in solar through commercial companies. In this scenario, businesses can claim a 48E tax credit through leases and power purchase agreements. 

The 48E tax credit does two things that help residential solar development. First, companies get to take advantage of federal tax incentives to encourage development. Secondly, businesses receiving the credits can pass along those savings to residents as lower-cost power. 

Where Does Residential Solar Stand Today? 

Without federal tax benefits, today’s homeowners are in a worse position than they were a few short months ago. 

Luckily, residents have a few other cost-saving avenues to make going solar more affordable. A growing number of states are stepping up to the plate, instituting trust funds, assistance programs, and other incentives.  

For those interested in going solar, the N.C. Clean Energy Technology Center’s DSIRE database outlines available state and municipal solar incentive programs. 

Commercial and Utility-Scale Solar 

Commercial and utility-scale solar didn’t suffer as much as residential, but developers are still licking their wounds. 

The problem here isn’t the elimination of crucial tax credits, but rather the timing of them. Under the Inflation Reduction Act, ITC and PTC credits were in place at current levels until 2032. Afterwards, there was a gradual multi-year sunset period. 

This is no longer the case with the OBBBA. Under the new law, Section 48E ITCs now face a cliff at the end of 2027. The timeline is drastically shorter, forcing companies to move projects along much more quickly and with fewer protections. 

For a wind or solar energy project to qualify for a 48E or 45Y credit, construction must begin by July 4, 2026. But the July 4 cutoff is more than a convenient deadline. Starting before then allows developers to qualify for a four-year safe harbor, giving them more time for the job. 

But missing the start date cutoff has dire consequences. Any projects started after July 4, 2026, must be fully operational by December 31, 2027. For large-scale utility projects, the timeline might be nearly impossible. Smaller community installations, however, could meet the December 2027 deadline with an efficient process. 

Are Safe Harbors Still Safe? 

Although developers and EPCs still have access to safe harbor coverage, they still pose issues. 

For example, the IRS recently changed the “Five Percent Safe Harbor” rule following Trump’s Executive Order 14315. Also known as “Ending Market Distorting Subsidies for Unreliable, Foreign-Controlled Energy Sources,” the E.O. says, in part: 

“This includes issuing new and revised guidance as the Secretary of the Treasury deems appropriate and consistent with applicable law to ensure that policies concerning the “beginning of construction” are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.” 

So, what does this jargon mean, and what does the government now consider “appropriate and consistent?” 

In short, solar developers must use physical work tests exclusively to prove work of a “significant nature.” Thankfully, the thresholds apply to both on-site and off-site processes, including manufacturing parts and system installation. However, preliminary work like planning, research, financing, testing, permitting, and clearing land is NOT included. 

Although the IRS changed the rules, low-output solar facilities (less than 1.5 MW) still fall under the Five Percent Safe Harbor rules. 

Batteries Avoid the Brunt of Rule Changes 

In a surprising twist, battery storage is largely safe from new rules instituted by the OBBBA. 

Battery storage projects keep their tax credits through 2033, but installations must comply with Foreign Entities of Concern rules. The rub here is that many of the companies and businesses in the battery storage supply chain fall within FEOC. 

China is one of several countries deemed a “covered nation” in the FEOC, which also includes North Korea, Russia, and Iran. Though every case is different, companies involved with these four countries typically don’t comply with the rules. The result is an industry forced to find alternative solutions to meet domestic and friendly-nation production. 

Domestic battery manufacturing is still a nascent industry in the U.S., so short-term availability and sourcing may struggle. The good news is that as near-shore and onshore production picks up steam, we could see long-term availability. 

New Year, New Taxes 

Finally, 2026 also brings a few other new tax surprises, including Prohibited Foreign Entity (PFE) rules. 

Introduced in the OBBBA, the PFE rules impact the 48E ITC, 45Y PTC, and 45X manufacturing tax credits, among others. Basically, the rules prevent Specified Foreign Entities (SFE) and Foreign-Influenced Entities (FIE) from claiming tax credits. Similar to the FEOC rules, SFEs include China, Russia, North Korea, and Iran. 

Businesses should also be careful around the new Applicable Payment Rule, which states that if an SFE is paid in a way that benefits them and grants control over a facility, the taxpayer can’t claim credits. The reason this rule is important is that it’s effective within the first 10 years of a site entering service. 

Operators must be aware of every company they work with, because one mistake could lead to trouble. For example, if an operator makes site maintenance payments to an SFE-associated company, the IRS can potentially claw back 100% of the claimed ITC. 

Finally, there are new Material Assistance Cost Ratio Rules, which restrict the percentage of products sourced from PFEs for projects. Though similar to the domestic content rules we’re already familiar with, there is a key difference between the two. Unlike domestic content thresholds, Material Assistance rules cap total PFE components at 40%; otherwise, companies lose the credit. 

Additionally, the percentage of non-PFE content increases annually, making the benchmark harder to reach. 

Solar’s Fight Continues 

The One Big Beautiful Bill Act was a shot across the bow for solar and wind companies. However, it also generated opportunities for the industry to find creative solutions to complex energy production problems. 

Though residential solar lost its investment tax credits, homeowners can still participate in solar energy through PPAs and leases. They also have access to many state and local incentives, provided they know where to find them. 

At the same time, utility-scale and community solar companies have until December 2027 to complete their projects. Without a safety net, the best option most projects have now is to break ground before July 4, 2026. That would allow them to activate safe harbor rules and buy additional time. Similarly, battery storage may become more popular as it maintains its tax incentives, albeit with a few more strings attached. 

The point is, even though solar took a hit from the federal government, the future remains strong for renewables. Electricity generation and demand are issues in the U.S., and the grid is inflexible and unreliable. Meanwhile, tech companies have employed solar solutions to power massive data centers. 

At this point, the solar industry is entrenched in the United States. Despite headwinds, more doors will open for solar companies, either at the state or even local level. It’s just a matter of time.

How Solar EPCs Can Collaborate with Communities

Posted on by Gino Geruntino

Solar development sometimes faces an uphill battle in getting buy-in from municipalities. 

Community members can distrust large-scale solar projects for many reasons. From concerns about rows of solar panels clogging picturesque views to fears about tanking property values, it’s a challenge.  

But perhaps the biggest issue solar EPCs face when working with small communities is a lack of communication. 

The Pitfalls of Poor Communication 

Unfortunately, poor communication can be dangerous for everyone involved. When stakeholders have concerns, it breeds mistrust, delays, and even opposition leading to canceled projects. 

On the flip side, sharing the right information at the right time can keep everyone aligned, making the process smoother. This means going beyond gathering rubber stamp approvals and actively participating in the community. 

Every community is unique, requiring developers to understand and embrace them in different ways. Being proactive and intentional with how we communicate, listening to and addressing potential concerns, and building trust are crucial. 

Why Communities Cast Shade on Solar 

It’s not that people don’t like solar energy development; they just don’t want projects too close to them. 

People call this fierce local community reaction to new projects NIMBY – Not in My Backyard. According to the Encyclopedia Britannica, NIMBY “connotes the unwillingness of individuals to accept the construction of large-scale projects by corporations or governmental entities nearby, which might affect their quality of life and the value of their property.” 

We first started hearing the acronym in the late 1970s, but social scientists didn’t adopt its use until the early 1980s. Since then, NIMBY has become a rallying cry for community groups concerned about negative development near their homes. 

But the truth is NIMBY concerns arise for many reasons. 

Aesthetics 

Renewable energy projects offer plenty of low-cost energy, but they aren’t exactly bastions of beauty. Although solar developers can’t change how panels and racking systems look, they can try hiding them. 

Typically, this includes beautification efforts like creating region-specific landscapes and pollinator habitats. Though neither completely obscures the panels from view, they go a long way toward helping them blend in. 

Location and Size 

Community-scale solar sites are smaller than utility-sized installations but are still large. 

The sheer size of these projects can overwhelm rural communities despite benefiting from the electricity produced. People may be afraid that the land won’t be usable for farming or grazing purposes. 

Sites may also be visible from the roadside, affecting scenic rural views. 

Tanking Property Values  

Some homeowners living near solar farms believe their property values will slump. 

However, a recent Virginia Tech report analyzing nearly 9 million home sales near solar sites discovered some interesting data. According to them, farm and vacant land within two miles of solar sites increased in value by 19%. 

VT’s data is more complicated for residential properties. Homes within three miles of solar sites saw a 4.8% drop in value. However, losses were mitigated by larger lot sizes, more distance, and project age. 

Land Use Worries 

While many developers aim to build on unattractive, inexpensive land, sometimes the best locations are situated on agricultural land. 

When farmland becomes the focal point for development, some people may see it as a waste or an attack on local farmers. They think farmers could be using the land for crops or animals and are missing out because of the solar panels. 

Partisan Politics (Us vs. Them) 

Politics can divide people, but they may also galvanize communities against outside threats. 

The idea is that corporations and large-scale companies will come in and ruin the rural way of life. For some, it could mean destroying the landscape. For others, it may be the thought of rural communities bearing the brunt of a project so other communities and companies can benefit. 

Worse yet, the project could draw the ire of folks who believe new solar jobs could be temporary. This may leave community members questioning the project’s value. 

Good Ol’ Fashioned Misinformation 

Mark Twain once said, “A lie can travel halfway around the world while the truth is putting on its shoes.” 

From tales of toxins leeching into the water to talk of solar panels damaging the land, misconceptions are everywhere. But rumors and stories can quickly obscure the truth about renewable energy.  

Though some concerns are malicious and meant to derail projects, many are simply misconceptions. In large part, these rumors typically stem from a lack of solar education coming from trusted experts. 

Forging Relationships 

No matter how you slice it, the problem remains – people in small, rural communities don’t trust developers. 

When solar EPCs approach rural projects, they must look beyond the X’s and Os. Any large-scale electrical generation project is a massive undertaking and can drastically change communities. 

Listening to community members and understanding their needs goes a long way. As both sides build trust, it opens doors for more effective communication and stronger partnerships. 

But what does collaboration with a small community look like? 

Find Sites That Work for Everyone 

Look for sites that could benefit from revitalization, like brownfields, industrial sites, or undesirable land. Avoid important community areas, like working farmland or popular animal habitats. 

Work with community groups and other organizations to promote environmental practices. From agrovoltaics and ecovoltaics to soil erosion and habitat protection, companies have many worthy causes to pursue. 

Additionally, find ways to beautify the land and generate power without imposing on nearby properties. 

Practice Active Listening 

Solar projects are a huge commitment for rural communities. Developers should aim to integrate themselves into the region. 

This should occur early in the project, particularly during the planning and development phases. Ask for input from local leaders, homeowners, policymakers, and citizen groups, and be attentive to their needs. These people may become advocates for the project and should be in the loop throughout its development. 

Creating collaboration opportunities also means building relationships with local groups that can engage others on your behalf. Their goal is to fill information gaps and address blind spots well before shovels hit the dirt. 

Reach People Where They Are 

Project development for community- and utility-scale solar sites involves years of planning. 

Attending public forums, listening proactively, addressing concerns honestly, and sharing data and insights are critical to building trust. Solar EPCs should also consider using multiple types of media to inform stakeholders. 

People don’t consume only one type of information. Invest in physical, digital, and in-person methods to reach people in the forums they’re active in. Every touchpoint is an opportunity to address concerns, educate, and offer critical updates. 

Address Misinformation Early 

People naturally have questions about renewable energy generation, but not every fear is factual. 

When questions and rumors arise, answer honestly and actively listen to citizens. With that said, be ready to combat misinformation with facts, figures, and trusted sources. 

Without accurate data, citizens are less likely to support long-term projects. The result could be delays, opposition, political pushback, and even cancellation. 

Build Strong Partnerships 

Start building meaningful relationships with local organizations, utilities, community groups, and politicians. They’ll be able to help with the approval process and keep everything moving smoothly. 

It starts with learning who the key stakeholders are and working closely with them. Potential partners include neighborhood groups and business organizations, non-profits, colleges, and even farming associations. 

Making inroads with local organizations provides solar EPCs with more viewpoints and information. 

Honesty is the Best Policy 

NIMBY relies on the idea that citizens don’t trust large-scale developers. 

To break the stigma and promote collaboration, share information freely. Provide as much information as possible and offer it in ways that are easily accessible, digestible, and well-sourced. Try to avoid heavy-handed industry jargon that causes eyes to glaze over – focus on real-world examples for proof. 

Additionally, take time to consider how setting up a renewable energy generation plant will impact people. Take the time to highlight the positives of these projects once they’re complete, including permanent jobs, low-cost power, and tax benefits. 

Discuss Community Benefits Agreements (CBAs)  

A CBA is a legal agreement between a developer and the community, covering everything the community will receive by supporting (or not opposing) local development. 

Towns that sign a CBA earn several concessions in the form of investments. For example, towns could receive new parks, greenspaces, or community centers, or negotiate for better energy costs. Municipalities could also receive funding for low-income programs, workforce education, and other initiatives. 

Beyond standard legal agreements, being a good neighbor means integrating into the community. Companies can sponsor events, host open houses, and create programs allowing citizens to participate in the project’s long-term success. 

Collaboration vs. Competition 

Solar development shouldn’t be a battle. 

Developers should pay attention to citizens and work openly with community organizers to create positive outcomes for everyone. Building rapport with citizens and advocacy groups often streamlines projects, reduces delays, and improves stakeholder relations. These partnerships, if strong enough, also help fight negative press, creeping misinformation, and other showstoppers. 

Clean energy is part of the future, but only if everyone is on board. Better, deeper, and more honest partnerships get us all where we want to go.

What is Community-Scale Solar?

Posted on by Mike Zimm

When most people think about solar installations, two types generally come to mind: rooftop and utility-scale. 

Rooftop or backyard residential PV solar panels provide enough electricity to power a home or small business. Meanwhile, utility-scale operations are designed to power towns, cities, and even regions. 

But there’s a third option emerging in the U.S.: community-scale solar. Larger than residential but smaller than utility-scale, community-scale installations range from a few megawatts to tens and power communities. 

Small Footprint, Large Impact 

True to its name, community solar projects are small, usually less than 5MW, but can generate enough electricity to power thousands of homes. 

Unlike utility-scale solar locations, which utilities develop on owned land, community solar farms live on leased land and get installed by EPC (Engineering, Procurement, and Construction) solar companies like Schuler-Haas, Nexamp, and TerraForm. Once complete, residents and businesses can subscribe to the site and receive credits. 

Smaller solar arrays are picking up steam in several states, including New York, California, Minnesota, and Massachusetts, but can be found in more than 40 states, Washington D.C., and Puerto Rico. Although solar installations were down 16% in Q2 2023 compared to 2022, about 226 MWdc of solar was added to the grid.  

The good news is the Solar Energy Industries Association (SEIA) expects growth from 2024 through 2028, thanks to better policies and more interest. 

How Does Community Solar Work? 

Community-scale solar is unique in size and operation, making it viable for people who can’t fully invest in solar but want to participate. 

Unlike installations owned by a single person, business, or utility company, community solar projects benefit groups of businesses and individuals throughout the service area. They can either pay to own a portion or subscribe to a community solar installation, allowing them to collect solar credits on their electricity bills. 

But what are solar credits, and how do they work? As the solar array generates electrical power, subscribers and owners collect credits based on the electricity produced. Those credits are then applied to their utility bills. 

According to the NREL, about 49% of households and businesses can’t have rooftop solar. For those who can’t afford a residential PV system or don’t have the right conditions to support one, community solar is an option. 

Even better, the energy produced by community solar goes straight from the array to the grid and is delivered directly to those living nearby. 

Is Community Solar Worth It? 

With all the talk of subscriptions and credits, community solar sounds complicated, but it’s a popular choice for consumers and builders for several reasons. 

  • Accessibility: Community solar allows people to invest and benefit from solar installations with a low-risk investment. They still reap the rewards of solar power without the massive upfront purchase to install panels. 
  • Cost savings: Community solar is a low-cost electricity producer compared to traditional fossil fuels. 
  • Supports the local community: Solar installations create jobs and can support sustained regional economic growth. 
  • Varies energy sources: Renewables can support traditional fossil fuels during periods of high demand. They can also help supply power in the case of an emergency when fossil fuel sources are offline. Solar arrays also help develop microgrids, which limit the spread of blackouts if a problem arises. 
  • Cleaner energy: Solar panels produce no by-products, and the sun is an infinite fuel source. Energy storage and consistent production are still troublesome, but the technology needed to address and mitigate those problems is quickly evolving. 

Of course, not everything is perfect. Every investment, including community solar, has inherent risks. 

Drawbacks and Concerns 

Despite renewable energy projects earning the praise of agencies, organizations, and the public, every emerging technology has its fair share of challenges. It’s especially true when attempting to integrate them into older installations. 

  • Interconnection Issues: According to a 2022 White House statement, about 70% of U.S. transmission lines are 25 years old or older, with many pieces coming online in the 1960s and 1970s. Unfortunately, that makes it harder for solar installations to integrate. In those situations, the difficulty of integrating leads to expensive delays, long waiting lists, and high connection fees to cover costs. 
  • Overpowering the system: Substations are designed to handle occasional overcharges or power surges, but not constantly. When a massive influx of electricity is added to the grid too quickly, it can lead to outages and damage. 
  • Location issues: In rural communities, solar installations may be miles from load centers. Getting power to the load center for distribution means more money, time, and labor is needed. These costs ultimately lead to a higher project cost and delayed ROI. 
  • Storage Issues: Solar energy is infinitely renewable but hard to store. Effective battery solutions are available but are expensive, and the technology hasn’t reached its full potential yet. Storage also becomes an issue in places where the sun isn’t shining every day and locations where snow is an issue. 

As technology improves and more utilities invest in renewable technology, it will become easier to interconnect with the larger grid. In the meantime, smaller installations can create microgrids that connect to the larger grid but reduce the effects of an outage in their communities. 

What is the Growth Potential? 

Thanks to several pieces of federal legislation, solar and other renewable energy sources are having a coming out party. 

Solar has accounted for about 45% of all new electricity-generating capacity added to the electrical grid this year, including 226 MWdc of community solar in Q2 2023. The good news doesn’t end there, as experts claim more advancements are coming. 

Global research organization Wood Mackenzie recently touted the strength of community solar, suggesting the industry could grow nearly 120% through 2027. The report also notes that the country could add another 6 GW of electricity to the grid by then. Currently, about 5.27 GW has been installed. 

Several states are leading community solar solutions, including New York, which hosts about half of the U.S.’s installed total. However, new laws, including the Inflation Reduction Act (IRA), have put solar in a much stronger position in the coming years. 

The IRA coincides with a 24-month moratorium issued by the White House on solar panels from four Asian countries: Thailand, Vietnam, Malaysia, and Cambodia. The moratorium expires in June 2024 and is designed to help get domestic solar production off the ground while giving companies and utilities access to lower-cost solar panels to complete ongoing projects. 

Domestic production is expected to improve for balance of system products like PV wire, panels, and racking materials, and organizations like Wood Mackenzie and the SEIA are confident the industry will flourish. 

High Potential, Low Cost of Entry

There are plenty of tax credits and incentives to get people involved with residential solar, but barriers to entry are still high. Options like community solar reduce investment costs while helping people do something good for the community, the environment, and their wallets. 

It also comes in handy for people living in low-income and rural areas, where credits can impact how much they pay for the electricity they consume. Rural locations also tend to have more space for solar installations, shortening the distance from the array to a load center. 

The benefits of community solar are undeniable, but there are still hurdles. Our electrical grid is rapidly aging, making it difficult to efficiently interconnect with existing substations and other infrastructure. If the substations and grid technology are too old, it will be harder to integrate efficiently. 

We’re getting closer to a world run by renewables. More advancements mean more opportunities for good-paying jobs, low-cost electricity, and better resilience in the face of storms and other emergencies. It will take time, but a renewable-powered future is possible.