Congress Must Not Ignore Residential Solar Tax Credit Inequities
Courtesy of RMI.
By Ryan Shea & Russell Mendell
Through the Justice40 Initiative, President Biden has made clear that bringing clean energy benefits to marginalized and low-income communities is a priority. Right now, low-income households experience up to three times higher energy burden (the percent of household income spent on energy costs) than high-income households. Rooftop solar is one of many important solutions available to help alleviate this burden. When financed, it can immediately lower household energy bills with no money down in many parts of the country.
Unfortunately, rooftop solar has disproportionately benefited high-income and White residents. While low-and moderate-income (LMI) residents make up 43 percent of the US population, only 21 percent of residential solar installations benefited these communities in 2019. On top of that, nearly half of communities with a majority of Black residents did not have a single solar system installed.
This disparity is exacerbated by the inequitable design of existing tax credits that incentivize residential solar. The solar investment tax credit (ITC) provides minimal advantage for those with little to no federal income tax — and thus have little use for a tax break.
In its version of the reconciliation bill, the US House of Representatives has included a direct pay option under section 48 (ITC 48) for business- and utility-scale renewables. This would allow entities without sufficient tax liabilities to take full, direct advantage of the ITC and accelerate renewable deployment. But, importantly, the current bill language does not extend the same direct pay provisions under section 25 (ITC 25D) for residential solar.
It is essential for Congress to change ITC 25D from a tax break to direct pay to help bring clean energy to more Americans, particularly LMI Americans. Specifically, the change would:
- allow substantially more homeowners to use the tax credit,
- further enable clean energy sources to help alleviate LMI energy burden, and
- bring solar jobs to LMI communities.
Residential Direct Pay Makes the Tax Credit Available to Substantially More Households
The House’s currently proposed version of the residential tax credit under section 25D can offset the upfront cost of a typical solar photovoltaic system by around $5,000 (assuming $3.30 per watt installed and a 5 kW system). That discount would be far out of reach for almost all LMI households, and even many middle-income households, given that their tax burdens often fall below that threshold.
Around 7 in 10 American tax filers would not have enough annual tax liability to receive the full ITC 25D benefit, according to 2018 data from the IRS. And the more than 4 in 10 Americans that do not have any federal income tax liability at all would see zero benefit.
Consider a married couple with one child making a combined income of $60,000 per year (around 70 percent of the median family household income). Given their annual federal tax liability of around $1,500, they would see only 30 percent of the House’s currently proposed residential solar tax credit in the year that they purchased the system. The inequities are even starker for low-income households. If that same household made $45,000, they would likely not receive any benefit.
While the current ITC 25D does have a carryforward provision that allows taxpayers to apply the rest of the credit in future years, most homeowners do not realize this complicated provision. Even with this policy in place, LMI households likely cannot wait years to receive the full amount, and the bottom half of earners still receive little to no benefit from the incentive.
Residential Direct Pay Can Help LMI Residents Reduce Their Energy Burden
Changing the ITC 25D from a tax break to direct pay would not only lower the upfront cost of solar for residents, but it could also be the catalyst for LMI homeowners in many states to lower their energy costs. For the more than 100 million American households without the tax liability to utilize the full ITC 25D, changing this benefit to direct pay could be the difference between rooftop solar lowering or increasing their bill.
For LMI households without any federal tax liability, an average 20-year rooftop solar loan would reduce their energy burden in just 19 states under the current policy, according to an analysis using RMI’s forthcoming Residential Solar Calculator. Direct pay for ITC 25D would bring this number to 38, doubling the number of states where families below the federal income tax threshold would be able to use a solar loan to save money with no money down.
This change would also decrease utility bills by around 20 percent. This could significantly accelerate the solar market in these 19 additional states and bring the co-benefits to more LMI communities.
Residential Direct Pay Is Essential to Bring Solar Jobs to LMI Communities
By modifying the ITC 25D to direct pay and opening up the solar market to a previously untapped portion of the country, the solar industry can also bring economic development and workforce benefits to LMI communities.
If LMI communities could match the levels of annual rooftop solar installations that are currently seen in high-income neighborhoods, an additional 1.2 GW of residential solar economic activity could take place in LMI communities each year. This would generate nearly $4 billion more in economic activity (assuming $3.30 per watt installed) and over 26,400 more jobs each year (assuming 22 residential solar jobs per MW). To realize this full impact, solar job training will also be essential to ensure a smoother, more equitable transition to cleaner energy sources, while maximizing economic benefits.
It’s Time for Congress to Take Action
Right now, Congress has a once-in-a-decade opportunity to design equitable climate policy that will ensure all communities can access the benefits of renewable energy.
Fortunately, momentum is building. The Residential Renewables for All coalition recently formed to advocate for this change to the residential solar tax credit, which 25 US Senators have urged leadership to include in reconciliation. The coalition includes more than 350 environmental justice advocates, environmental justice organizations, and renewable energy businesses.
For too long, the ITC 25D has made solar deployment more inequitable. To level the playing field and reduce the energy burden for lower-income Americans, all households should have the same opportunity to access residential solar incentives. This simple change can lead to more equitable solar deployment and bring the economic, workforce, health, and emissions benefits to the communities that need them most.
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Despite the will-they, won’t-they uncertainty surrounding the future of tariffs and union jobs and – let’s face it – just about everything else in every industry these days, GM says it has no plans to move production of its Ultium-based EVs from Mexico to the US.
GM has exclusively produced electric cars at its plant in Ramos Arizpe, Mexico since last year, and has created some 5,000 new jobs in the area according to economist Raquel Buenrostro, who currently serves as Mexico’s Secretary of Anti-Corruption and Good Government. And those cars – including the popular Chevy Equinox EV and Honda’s hot-selling Prologue – have been huge hits in their respective segments.
The General seems to know a good thing when it sees one, so it should come as no surprise to learn that GM has no plans to scuttle its assembly lines out of the country.
“At this time, GM has no plans to halt or relocate production of any of our EV models made in Mexico,” the director of GM de México’s EV operations, Adrián Enciso, told the Spanish-language newspaper, Milenio. “It’s possible that additional models, such as (the new 2026 Chevy Spark) could be built here, too.”
Market Watch is reporting that the proposed tariffs, if they take effect, could raise GM’s cost to make electric cars in Mexico by up to $4,300 per vehicle. But while that could put a significant per-unit dent in GM’s profits, it’s worth noting that the EVs might continue to be built in Mexico and sold in Canada and other markets – the new Spark, especially, is targeted towards Central and South America, anyway.
And, frankly, GM can afford it.
SOURCE: Mexico News Daily.
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The mining equipment experts at Epiroc will supply a fleet of autonomous, zero-emission electric Pit Viper 271E and SmartROC D65 BE drill rigs at a number of Australian mines operated by multinational metals firm, Fortescue.
The $350 million AUD (approx. $225 million US) deal will see Epiroc AB supply its customer, Fortescue, with a number of blast hole drill rigs powered by either a cable connection to grid energy or, for more remote sites, batteries.
Fortescue will put the rigs to work at its iron ore mines in the Pilbara region in Western Australia. The driverless machines will eventually be operated fully autonomously, overseen by remote operators at Fortescue’s Integrated Operations Centre in Perth – more than 1,500 km away!
Epiroc says the machines will eliminate around 35 million liters of diesel consumption annually, according to Fortescue.
“Fortescue is at the forefront of the mining industry in reducing emissions from operations, and in using automation to strengthen safety and productivity, and we are proud to support them on this important effort,” says Epiroc President Helena Hedblom. “Not only is this the largest contract we have ever received, but it is also a major step forward for our electric-powered surface equipment. We look forward to contributing to Fortescue’s continued success now and in the future.”
The Pit Viper 271 E rotary blast hole drill rig that offers the same levels of performance that the diesel Pit Viper line is acclaimed for. Its patented cable feed system that prolongs component longevity and reduces operational costs. The SmartROC D65 BE is a new, battery-electric version of the proven SmartROC D65 drill rig. They’re manufactured in Texas and Sweden, respectively.
Fortescue has been a pioneer in the electrification of the mining industry, whether it’s converting its massive Liebherr excavators to electric, funding the development of 6MW EV chargers, or deploying autonomous electric drill rigs like these in their mines – they’re well on their way to achieving their goal of carbon neutral operations by 2030.
Electrek’s Take
From drilling and rigging to heavy haul solutions, companies like Fortescue and Epiroc are proving that electric equipment is more than up to the task of moving dirt and pulling stuff out of the ground. At the same time, rising demand for nickel, lithium, and phosphates combined with the natural benefits of electrification are driving the adoption of electric mining machines while a persistent operator shortage is boosting demand for autonomous tech in those machines.
We covered the market outlook for autonomous and electric mining equipment earlier this summer, and I posted an episode exploring the growing demand for electric equipment on an episode of Quick Charge I’ve embedded, below. Check it out, then let us know what you think of the future of electric mining in the comments.
More EVs means more mines
SOURCE | IMAGES: Epiroc.
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Solar and wind accounted for almost 98% of new US electrical generating capacity added in the first two months of 2025, according to new Federal Energy Regulatory Commission (FERC) data reviewed by the SUN DAY Campaign.
In FERC’s latest monthly “Energy Infrastructure Update” report (with data through February 28, 2025), FERC says 39 “units” of solar totaling 1,514 megawatts (MW) were placed into service in February, along with two units of wind (266 MW). They accounted for 95.3% of all new generating capacity added during the month. Natural gas provided the balance (87 MW).
For both January and February, renewables (6,309 MW) were 97.6% of new capacity, while natural gas (147 MW) provided just 2.3%, with another 0.2% coming from oil (11 MW).
Solar dominated February generating capacity
Solar accounted for 81.1% of all new generating capacity placed into service in February. It was 73.3% of new capacity added during the first two months of 2025.
Recent solar additions include the 237.3 MW Fence Post Solar in Texas, the 150-MW Northern Orchard Solar in California, and the 135-MW Prairie Ronde Solar Project in Louisiana.
Solar has now been the largest source of new generating capacity added each month for 18 consecutive months, since September 2023.
Solar + wind now almost 25% of US utility-scale generating capacity
New wind accounted for most of the balance (14.3%) of capacity additions in February. New wind capacity (1,568 MW) added in January and February combined was 70% more year-over-year (922 MW).
The new wind farms that came online in February were the 140.3-MW Pioneer DJ Wind in Texas and the 126-MW Downeast Wind in Maine.
The installed capacities of solar (10.7%) and wind (11.8%) are now each more than a tenth of the US total. Together, they’re almost one-fourth (22.5%) of the US’s total available installed utility-scale generating capacity.
Further, approximately 30% of US solar capacity is in the form of small-scale (e.g., rooftop) systems that aren’t reflected in FERC’s data. Including that additional solar capacity would bring the share provided by solar and wind to more than 25% of the US total.
With the inclusion of hydropower (7.6%), biomass (1.1%), and geothermal (0.3%), renewables currently claim a 31.5% share of total US utility-scale generating capacity. If small-scale solar capacity is included, renewables are now about one-third of total US generating capacity.
For perspective, a year ago, the mix of utility-scale renewables accounted for 29.3% of total installed generating capacity. Five years ago, it was 22.6%. Ten years ago, it was 16.9% (with more than half provided by hydropower). Thus, over the past decade, renewables’ share of US generating capacity has nearly doubled.
FERC’s 3-year solar + wind addition forecast
FERC reports that net “high probability” additions of solar between March 2025 and February 2028 total 89,497 MW – an amount almost four times the forecast net “high probability” additions for wind (22,890 MW), the second fastest growing resource. FERC also foresees net growth for hydropower (1,323 MW) and geothermal (92 MW) but a decrease of 130 MW in biomass capacity.
The net new “high probability” capacity additions by all renewable energy sources would total 113,672 MW. There is no new nuclear capacity in FERC’s three-year forecast.
Despite Trump’s big fossil fuel push, FERC is projecting that coal and oil will contract by 24,939 MW and 2,104 MW, respectively. Natural gas capacity would expand by 1,583 MW.
Thus, adjusting for the different capacity factors of gas (59.7%), wind (34.3%), and utility-scale solar (23.4%), electricity generated by the projected new solar capacity to be added in the coming three years should be at least 20 times greater than that produced by the new natural gas capacity, while wind’s new electrical output would eclipse gas by eight-fold.
If FERC’s current “high probability” additions materialize, by March 1, 2028, solar will account for nearly one-sixth (16.3%) of US installed utility-scale generating capacity. Wind would provide an additional one-eighth (12.7%) of the total. So each would be greater than coal (12.4%) and substantially more than either nuclear power (7.3%) or hydropower (7.2%).
Assuming current growth rates continue, the installed capacity of utility-scale solar is likely to surpass coal and wind within the next two years, placing solar in second place for installed generating capacity behind natural gas.
Renewables still on track to exceed natural gas in 3 years
The mix of all utility-scale (ie, >1 MW) renewables is now adding about two percentage points annually to its share of generating capacity. At that pace, by March 1, 2028, renewables would account for 37.6% of total available installed utility-scale generating capacity – nipping on the heels of natural gas (40.2%) – with solar and wind constituting more than three-quarters of the installed renewable energy capacity. If those trendlines continue, utility-scale renewable energy capacity should surpass natural gas in 2029 or sooner.
However, if small-scale solar is factored in, within three years, total US solar capacity (small-scale plus utility-scale) could approach 330 GW. In turn, the mix of all renewables would then exceed 40% of total installed capacity while natural gas’s share would drop to about 37%.
Moreover, FERC reports that there may actually be as much as 220,985 MW of net new solar additions in the current three-year pipeline in addition to 67,811 MW of new wind, 9,788 MW of new hydropower, 201 MW of new geothermal, and 39 MW of new biomass. By contrast, net new natural gas capacity potentially in the three-year pipeline totals just 20,856 MW. Consequently, renewables’ share could be even greater by late winter 2028.
“The Trump Administration’s assault on wind and solar has not – at least not yet – had an appreciable impact on the rapid growth of renewable energy generating capacity,” noted the SUN DAY Campaign’s executive director, Ken Bossong. “Moreover, if FERC’s current projections materialize, the mix of renewables will surpass natural gas capacity before the end of President Trump’s time in the White House.”
Electrek’s Take
Just three days ago, I reported on nonpartisan policy group E2’s latest Clean Economy Works monthly update, which revealed that nearly $8 billion in clean energy investments and 16 new large-scale factories and other projects were cancelled, closed, or downsized in Q1 2025. (E2’s cleaner net is wider than FERC’s and includes such things as EVs, battery storage, hydrogen, and grid and infrastructure projects.) Clean energy is growing, but Trump’s executive orders have still managed to slow its growth. Natural gas is still in the lead, but coal and oil still can’t touch renewables.
Read more: FERC: Solar + wind set for a strong 3-year run despite Trump’s sabotage
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