The Impact of Tariffs and Expiring Solar Tax Credits in 2024

With so much uncertainty around the tax credits for solar projects as we approach the 2024 Presidential Election, we wanted to provide our take on the situation as we enter the critical end-of-year period.

Traditionally, the available subsidies for renewable energy projects are the subject of much scrutiny in campaign season and this year is no different, except that there are now two different substantial subsidies on the table.

Plus there is the issue of tariffs on imported tier-one solar equipment, all of which affect the economics of a commercial solar project.

As things stand, in September 2024, we have already taken the tariff hit, which will begin to add 12.5% to overall project costs in 2025.

The growing feeling is that the 30% Investment Tax Credit is now increasingly valued on both sides of the political divide as a means of helping sustain businesses with lower electricity costs, as much as with more efficient operations.

However, as is the nature of our political landscape, that does make the 10% Energy Communities Bonus Tax Credit, introduced as part of the Inflation Reduction Act (IRA), a rather obvious choice as the sacrificial lamb. As such, rolling back certain elements of the IRA has been anointed “day one” material by some leading Republicans. 

With the recent interest rate cuts too, Q4 2024 looks increasingly like a compelling time to go solar for businesses in California and Nevada. It’s certainly clear that any plans to “wait and see” are likely to backfire.