SC solar industry is in 'survival mode' as Trump's spending bill rolls back incentives

Mark Mathewson always knew he wanted solar panels on the rooftop of his Mount Pleasant home. It was just a matter of being able to afford them. Federal tax incentives helped seal the deal.

The panels came online this April, and already he's seeing his electricity bill drop. Some months have been as low as $0. Even in the hottest months, when the air conditioning has been running more than usual, the panels have offset his family's energy use by 90 percent, he said.

Homeowners now are losing this opportunity to subsidize the cost of solar panels with federal tax incentives.

The "One Big Beautiful Bill Act," which President Donald Trump signed into law July 4, ends all tax incentives for solar power, casting a shadow over the future of what has been a growing industry in South Carolina.

State representatives who voted in favor of the cuts say the bill evens the playing field for energy competitors. The bill's critics say it paves the way for oil, gas and coal to continue to dominate the market and will stunt the state's promising solar industry, which has been ramping up in the last decade.

The Congressional Budget Office estimated terminating tax credits for zero-emissions technologies, including wind and solar, will save the federal government $308 billion over 10 years. Energy sector studies show the move may cost South Carolinians, who are likely to see steep electricity bill increases as a result, The Post and Courier previously reported. Critics of the bill also say residents could experience a higher risk of brownouts — temporary drops in voltage to avoid possible blackouts — if the state's growing dependence on natural gas and coal fails to scale with demand.

The final version of the bill gives commercial-scale solar projects a bit of wiggle room. Solar projects that begin construction within the next year and come online before the end of 2027 still will qualify for federal tax credits. Commercial projects that come after won't.

Residential solar was hit the hardest, said Aaron Davis, owner of Firefly Solar based in Piedmont. Federal tax credits for residential renewable energy, including solar, will end Dec. 31. This tax credit allowed homeowners to recoup 30 percent of what they paid for their residential solar systems. Without this rebate, Davis expects demand to plummet, dishing a blow to homeowners who want rooftop solar and small businesses like his that provide it.

Davis hoped for a different outcome. He and his 40 employees reached out to state senators and representatives. Then, Davis flew to Washington, D.C., to meet with staff in U.S. Sen. Lindsey Graham's office, joining hundreds of others from the industry meeting with their respective representatives to ask for more time.

"What we were asking for was not to give us indefinite tax credits, but to give us a glide path so that we had time to change, adjust business models and adjust investments," he said.

Their request to extend the tax credit for one more year was denied.

"It's not going to help homeowners looking for cleaner, more affordable energy," Davis said. "It's not going to help homeowners looking for energy independence, and it's not going to help small businesses like mine."

With less than six months to pivot, not all solar businesses will make it. Those that do will have to scale back, making some layoffs inevitable, Davis said.

'The sacrificial lamb'

The solar industry in the United States started picking up in the last decade, and South Carolina has reaped the benefits, said Richard Lovegreen, manager for Greentech Renewables in West Columbia and chairman of the South Carolina Solar Council.

The state is home to 81 solar companies that employ nearly 3,500 people, the Solar Energy Industries Association reported in January. These companies include manufacturers assembling panels and producing panel components, solar developers and service providers that install and maintain solar and battery systems.

"It's kept a roof over my head," said Heather James, a Charleston-based installer and solar technician at Boss Energy. "It's kept food in my belly, and I'm ever grateful for it."

Federal tax credits for residential and commercial solar were first offered in 2006, under President George W. Bush. The Inflation Reduction Act in 2022, signed into law by President Joe Biden, extended these tax credits through 2032, further encouraging solar manufacturers to set up shop in the U.S., Lovegreen said.

"We want to win the jobs back from China," he said. "In the United States, we invented the solar cell technology, and have subsequently lost the race for the vast majority of manufacturing to other parts of the world."

Tax credits incentivized businesses to move operations to the U.S. and made residential solar more affordable for homeowners and businesses, Lovegreen said.

All of South Carolina's representatives voted in favor of cutting tax credits for solar projects, except for Rep. Jim Clyburn. Sen. Lindsey Graham didn't respond to requests for comment.

"Senator (Tim) Scott's priority is paving the way for innovation to deliver reliable and affordable energy to South Carolinians," said Bradford Traywick, Scott's state press secretary, in a written statement. "The One Big Beautiful Bill ensures that solar projects already in the works are still eligible for tax credits while allowing South Carolina to secure its edge as a stable, low-carbon energy hub that attracts new manufacturers and supports energy security."

Without tax incentives, Lovegreen doesn't see how this is possible. The solar industry is a few years away from not having to rely on tax credits to make the technology affordable, he said.

Costs for solar have been steadily dropping. An average-sized residential system in 2010 cost roughly $40,000 before tax incentives. Now, that same system would cost around $28,880, according to the Solar Energy Industries Association.

While solar panels are assembled in the U.S., raw components needed for panel cells are produced elsewhere. If these other components were produced locally, it could make the supply chain more reliable, Lovegreen said.

"We need time to bring those facilities back," Lovegreen said. "If we don't support it long enough, and if we don't invest in it long-term, we'll never be able to onshore those opportunities."

Lovegreen predicted a flurry of commercial-scale projects starting construction in the next year to meet the 2027 deadline. Homeowners and small solar businesses have a much shorter runway of roughly 180 days, he said.

"(Residential solar) was the sacrificial lamb and it had the smallest financial impact on the budget," Lovegreen said.

South Carolina's state tax credit for residential solar remains active. This allows homeowners to recoup 25 percent of the cost, with a yearly limit of $3,500, Lovegreen said. It won't be enough to make up for the loss of federal incentives, he added.

Power struggle

Most of South Carolina's energy comes from nuclear, natural gas and coal, said John Brooker, director of energy policy at Conservation Voters of South Carolina.

The state is home to nuclear power plants. Natural gas and coal aren't extracted in South Carolina and must be imported from other states, he said.

"We are at the end of the line for electricity, where, without renewables, we're essentially an island," Brooker said. "We have to get all of our fuel shipped in from out of state. What this will mean is that you're going to see dirtier, more expensive energy in South Carolina and possibly blackouts."

Other than nuclear, solar is the only power source that can be produced locally in South Carolina, Brooker said.

And solar is the quickest to set up to meet the state's growing energy needs, Lovegreen said. Dominion's controversial proposed gas plant in Canadys will take at least five years to come online, The Post and Courier previously reported. Solar plants can be up and running within 18 months, Lovegreen said.

"When we talk about the energy demands of South Carolinians, we need to talk about how quickly we can deploy, and if we can't deploy that energy, we'll lose a lot of business," he said.

Solar can also protect against the volatility of coal and gas prices, said Eddy Moore, decarbonization director at the Southern Alliance for Clean Energy.

Most states are looking to diversify energy sources, using a combination of nuclear, oil, gas, coal and renewables, especially as population growth and new industries like AI data centers increase energy demands, Lovegreen said. To meet this demand, we need more power supply or less pressure on the grid — both of which can be done with solar, he said.

Mathewson, the Mount Pleasant homeowner who recently installed solar panels, tracks how much energy his home is producing in real-time. On sunny days, he can produce more energy than he can use and that his battery can store. Excess energy is transferred to the grid to be used by others, he said.

South Carolina's Republican representatives say cutting tax incentives for solar will put energy competitors on equal footing.

"The One Big Beautiful Bill ends the gravy train of taxpayer-funded subsidies for solar," Rep. Ralph Norman said in a written statement. "This levels the playing field and pushes all energy producers to compete based on merit, leading to a more efficient and reliable grid, not a weaker one."

That view fails to acknowledge current government subsidies for fossil fuels still chugging along, Davis said.

"Fossil fuel energy has been getting government incentives for over a century," Davis said. "So how is stripping the incentives for solar (leveling) the playing field? It's completely backwards thinking."

The bill also re-incentivizes coal, Lovegreen said, chalking it up to politics.

"It's very unfortunate we're in this heavily politicized market," he said.

The light in South Carolina's solar industry won't go out completely, he said. But surely it will dim as the tax incentives for solar energy are phased out.

Toby Cox is on the Rising Waters team. Reach her at tcox@postandcourier.com or at (843) 670-8651. You can also reach her securely on Signal at (843) 670-8651.