Future of residential solar at risk: A candid talk with Freedom Forever
Sweeping changes to federal solar tax credits could swiftly undo a decade of progress in the residential solar sector. Proposed changes to the Investment Tax Credit (ITC) could significantly disrupt two of the industry’s most vital growth drivers: the 25D tax credit for homeowners and the eligibility of solar leases under the commercial ITC. If enacted as currently written, these changes could contract the market substantially (some analysts saying by 50%), undermine small installers, stall domestic manufacturing progress, and threaten thousands of clean energy jobs nationwide.
The fallout is already being felt. Mosaic, one of the largest residential solar loan providers, is “pausing operations,” effective May 27, according to a message the lender sent to installer partners. Mosaic cited “capital markets uncertainty resulting from the solar tax credit 25D and 48E guidance” as the reason.
That’s just a splash of what will be a tsunami of impacts to residential solar, which was already in flux, adjusting to a tepid market plagued by higher interest rates and the systematic undoing of net metering payback rates by investor-owned utilities.
To understand the real-world impact of the proposed changes in the budget bill, I spoke with the team at Freedom Forever, one of the largest residential solar installers in the country. Joining me were Ben Airth, Policy Director, and Brian Eglsaer, Chief Operating Officer. Below is our edited and condensed conversation.
Realities of losing tax credits in residential solar
Chris: If 25D goes away and leases can no longer access the commercial ITC, how would that change your business?
Brian: If there’s no path forward for a TPO product—whether a lease or PPA—and 25D goes away, the residential solar space reverts back to what it was 15 to 20 years ago. Only people who can afford to pay cash, pure environmentalists, preppers, or the uber wealthy will install solar. The market would shrink dramatically.
Chris: Would losing lease eligibility under the ITC be more damaging than losing 25D?
Brian: Depends on who you ask. But as an industry, we’ve shifted back toward TPO, so losing that pathway could be more damaging overall.
Before the IRA, about 75% of the industry was cash and loans combined. After the IRA, it flipped. Now, about 75% of the industry uses TPO—either leases or PPAs. That’s especially true for large and regional installers. We’ve built a lot of infrastructure around 48E—domestic content, energy communities, all of it.
We’re very well diversified with four to five of the top six or seven TPO companies, and we’ve already built the software and processes to manage all the complexities of 48E. So for us, it would be survival, but for the industry, it’s a bigger issue.
Chris: Could this create a wave of orphaned lease systems?
Brian: Yes. We’ve already taken on more O&M and service work from other providers that have gone under. That work is costly, and customers get confused. When the installer disappears, defaults go up. That raises costs for everyone, and you risk a negative cycle across the entire ecosystem. Through the use of 25D and 48D credits, residential solar supports more local, long-term jobs, no land use issues, no infrastructure issues, reduces load on the grid and creates greater resiliency through the adoption of batteries They’re both essential.
Ben: Yes, and don’t forget—most of the actual money flowing into the industry is through 48E. Most of the jobs come from 25D, but 48E drives the financing that fuels growth. You can’t separate them.
Tax credits impact on U.S. manufacturing
Chris: What happens to domestic sourcing if those incentives go away?
Brian: We go back to the cheapest foreign products. And the manufacturers have been clear: if there’s no market in the U.S., there’s no reason to keep factories here. They’re not going to build components here to ship to Europe. That’s not how this works.
Ben: The beauty of the IRA was that it created demand on both sides — consumer and manufacturing. That synergy is hard to recreate. If you remove one side, the whole thing collapses.
I’m not completely pessimistic because I do think we are going to get through this. I am at least optimistic about 48E being preserved. But if it’s not, you’re going to see massive layoffs
Brian Eglsaer, COO, Freedom Forever
Chris: Was sourcing U.S.-made components cost-effective?
Brian: It was almost a wash, thanks to 45X. The first domestic content table that came out in May 2024 gave everyone a roadmap. We were working directly with manufacturers, figuring out how to increase from 40% to 45%, even 60% U.S. content. It gave the industry a clear path forward—and it was working. These factories were finally coming online. We were sourcing more U.S.-made content, and the whole system was scaling up. It was working. And now we’re turning the ship around for no good reason.
Tax credit changes, net metering gone … is this a doomsday scenario?
Chris: At the same time, in California, utilities and legislators are looking to break NEM contracts with existing customers. … I’m worried about the all the ways solar customers will have to feel negatively about their investment in solar going forward.
Brian: It’s too complex to explain the solar industry to a consumer. You don’t explain the AHJ, you don’t explain the utility … it’s always been our job to translate, and that’s getting harder to do that in some of these cases. I think customers, when they can see it in the news, will understand more. The NEM fights have been a little bit more public. And so the customers understood ‘oh, this is not the solar company doing this. This is the utility doing this.’
The scariest part about the grandfathering bill, even if this one doesn’t pass, and they don’t take away grandfathering now, if they succeed in getting rid of 25D and 48E, and the industry shrinks to 25% of its current size, the next time this fight comes up, there’s no industry left to fight, and the homeowners are on their own.
Chris: I mean … getting rid of NEM, abruptly taking away tax credits for residential solar … is this a doomsday scenario?
Brian: I’m not completely pessimistic because I do think we are going to get through this. I am at least optimistic about 48E being preserved. But if it’s not, you’re going to see massive layoffs. You’ll see lots of companies go out of business. Lots of unsupported systems. A lot of the financial companies will go out of business because there is no product to offer if the only thing available to you is cash. You’ll also see a lot of companies attempt to pivot to service, but there’s just not enough of that work to pivot to.
Blue collar jobs lost in the politics
Chris: It’s a bummer how swiftly the tax credit for homeowners was cut. People forget the 25D tax credit directly helps taxpayers – people. It’s also supporting a ton of good paying, local jobs.
Brian: One of our team members got a letter back from a Senator citing why they maybe aren’t going to support renewable energy. And they’re completely overlooking the positives of residential solar. They’re saying it takes up land. Well, no, we take up roof space. It doesn’t provide power at night … that’s why we install batteries. We have solved all of your problems.
We’ve got 3,000 20-somethings that get up every day at 5:00 a.m. and do a blue-collar job. Where they’re learning a trade, supporting families, and sending their kids to college. This is the American dream that you describe. Why do you want our children working in coal mines? They don’t want that job. They want this job. It has been hard to get that message across.
Ben: A few months ago, Freedom Forever received our approval from the Department of Labor for our registered apprenticeship program. It’s a 4-year program, and you can imagine what this apprenticeship program is doing for these folks who are getting that on-the-job training, that classroom training, with the company that they are actually working for, who in turn are providing higher wages because these people are going to get trained.
Message for lawmakers
Chris: What do you say to people who argue that solar should stand on its own, without subsidies?
Ben: Eliminate all subsidies and let’s talk. Both oil and gas have been subsidized for a century. They may not get the same tax credit, but they get specific depreciation benefits for their assets and deposits as they deplete. But solar has been and will continue to be in the market transformation stage until we get state and federal governments on the same page and not continually change the rules of the game. Plus, don’t we want to incentivize the things that we want as a society?
Chris: Final thought—what’s the one message you want lawmakers to hear?
Brian: They’re underestimating the number of jobs that are in these districts. A manufacturing facility might employ 100 or 200 people. That’s one office for us. That plant that produces 1 GW of solar panels, I would need 10,000 employees to install 1 GW of solar in a year. But we’re protecting these hundred jobs, not the 10,000.
45X doesn’t work without 48E. And 25D is crucial for small-town solar companies. We need both. If nothing else, extend the step-down for 48E and 25D.
