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The American solar manufacturing renaissance was charging ahead. Then President Donald Trump took the reins.
Since Trump resumed occupancy of the White House, promising to bring back manufacturing jobs, new investment in clean energy factories has plummeted from its Biden-era highs, and factory cancellations have surged instead. Now, with Trump’s signing of the One Big Beautiful Bill Act earlier this month, things are about to get even rockier for clean energy manufacturers — but several of the leading firms reshoring solar panel production still see reasons for qualified hope.
That’s not to say the path ahead will be easy. The law swings a battle-axe through the clean energy incentives that were carefully crafted by Democrats in the 2022 Inflation Reduction Act. Solar and wind deployment credits will disappear after 2027. Now, the U.S. will install somewhere between 57% to 62% less clean energy from 2025 to 2035, per a new analysis by Rhodium Group. That’s bad for all the customers and industries who will need vastly more electricity over that timeframe — not to mention the climate — but it also portends a shrinking market for American manufacturers to sell into.
“It’s a massive self-inflicted wound,” said Sen. Jon Ossoff (D-Ga.), an architect of the original clean energy manufacturing policy. “This law is a targeted attack on the advanced energy industry. It will hamstring industrial development; it will undermine energy independence and drive up energy costs by interrupting the development and installation of new generation capacity.”
But for manufacturers who have kickstarted a stunning reshoring of the solar supply chain after years of decline, the legislation’s final form is not nearly as dire as some earlier drafts. Chiefly, Republicans preserved the flagship manufacturing credit, which pays a company for each unit they make of key clean-energy components.
“Because manufacturing and job creation has always been a highlight of all politicians, independent of their party, that part has not been touched,” said Martin Pochtaruk, CEO of Heliene, which runs 1.3 gigawatts of domestic module production in Minnesota. However, the new law “has axed the businesses of many of our clients two years out, so it will require a lot of work by a lot of people to reshuffle how their businesses are run, and how they finance.”
The one major change the law did make to the manufacturing tax credit was to add in “foreign entity of concern,” or FEOC, restrictions, a whole new bureaucratic regime that polices companies’ corporate or supply-chain ties to China. New FEOC restrictions also apply to energy projects, and they actually resemble policies several domestic manufacturers have been requesting for years.
Take the case of T1 Energy, a solar manufacturer currently churning out 12,000 modules a day outside Dallas, on track for up to 3 gigawatts produced this year. Chinese giant Trina Solar actually built the factory but sold it to T1 (formerly known as Freyr Battery) in December, such that it is now operating under the control of a U.S.-based firm traded on the New York Stock Exchange. The company’s executive vice president for strategic communications, former longtime Wall Street Journal energy correspondent Russell Gold, called the law’s FEOC measures “good policy.”
“It promotes U.S. ownership and control of solar manufacturing and solar production,” Gold said. “Given how important solar is becoming on our power grids, that’s totally appropriate.”
Dean Solon, the billionaire solar entrepreneur who has manufactured connectors and cabling systems in Tennessee since the dawn of the modern solar industry, seemed unconcerned when I asked him in June about whether the new FEOC rules were too stringent.
“FEOC? Isn’t that a shitty little Italian car?” he responded.
For now, solar manufacturers that have factories operating or nearly operational can squint and see a good few years ahead while the tax credits are still accessible, though after that, it’s anybody’s guess. Companies that were about to commit to the multiyear effort to build new factories, however, just got an undeniable signal from Congress to take their jobs and economic dynamism elsewhere.
“The hill’s a lot steeper than it was before this for those kinds of investments,” said Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition.
Somewhat improbably, Trump’s signature policy effort let the Biden-era 45X clean energy manufacturing credit continue as planned before phasing down after 2030 and stopping entirely in 2033 (except for wind manufacturing, which got whacked with an early end).
Unlike the earlier House version, Gold noted, the law preserves transferability, which lets factories monetize their credits when they lack sufficient tax burden themselves; factories cost a lot up front before they start making money, so this is especially useful in their early years. Factories almost lost stackability, which guarantees credits for companies that produce several steps of the supply chain, but the final text preserved that, Gold added.
“When you look at 45X, which is what solar manufacturers do receive, it is exactly like what was included in the Inflation Reduction Act and proposed by Sen. Ossoff in the Build Back Better days,” Pochtaruk said.
That has direct implications for a solar cell factory Pochtaruk was developing somewhere in the U.S. but put on hold after the election as he waited to see if 45X would survive. Now that its fate is clear, Heliene can return to developing that factory, if the company determines it still makes sense in the new market landscape.
The major lingering concern for solar manufacturers is what happens next with their customers. The law, after all, attacks the demand-side credits that were designed to stimulate purchases of made-in-America solar products.
The early demise of the solar deployment credits will hit manufacturers in two major ways.
First, with the stroke of Trump’s pen, the amount of clean energy projects expected to come online in the U.S. over the next decade just dropped. Demand for the American factories that opened up to serve that market just took a commensurate hit. Americans pay a lot more for solar panels than the rest of the world, due to the trade protectionism in place to help factories here; thus, U.S.-made solar is for U.S. consumers, and can’t readily export to foreign markets if domestic demand suddenly drops.
Second, in destroying the solar deployment credits, Republicans also eliminated the domestic content adder, a bonus incentive that encouraged developers to pick domestic equipment over cheap imports.
“They removed the key incentive driving investment in American manufacturing of solar technology,” Ossoff said. “Go ask the industry. This is a huge gift to the Chinese Communist Party, which will reinforce China’s stranglehold on the solar value chain.”
Marta Stoepker, a spokesperson for Qcells, which runs the largest solar-module factory in the U.S., located in Dalton, Georgia, corroborated the importance of that policy for encouraging domestic purchases.
“Policy levers like domestic content and trade are critical to ensuring U.S.-made solar can compete against China,” she said.
That said, the new megabill might leave a path for solar installations to continue at a healthy clip for the next five years. It’s the five years after that when solar could fall off a cliff.
Under the new law, solar developers need to start building their projects between now and July 4, 2026, to secure the full 30% investment tax credit. (If they start after that date, arrays must be placed in service by the end of 2027.) Starting Jan. 1 next year, companies will also need to meet the newly written FEOC rules that limit the amount of Chinese-produced materials in a power plant. As far as the IRS is concerned, developers have officially started building once they begin physical construction or buy 5% of the overall capital cost of the project — say by purchasing transformers or inverters. Then, under what’s called safe-harboring rules, developers have four years from the end of that year to finish the project, provided they show continued progress.
That timeline, then, could support something close to the recent high level of solar deployment into 2030, which would be great for newly minted factories that need a little more time to get their footing. Qcells is racing to finish a new factory in Cartersville, Georgia, that will produce 3.4 gigawatts of panels and the cells and wafers that go into them. T1 is still ramping up to its full capacity of 5 gigawatts.
If the market follows the pattern from previous times Congress was set to end solar incentives, developers will rush to safe-harbor projects before the deadline, fast-tracking work that could have been spaced out over the next few years. Then they’ll have several more years to buy the rest of the project equipment, giving domestic factories more time to spin up.
Nonetheless, factories will have to navigate upheaval among their customers in the mad dash to lock in these incentives. Larger developers can afford to hustle and start a number of projects in the next year to secure the full tax credit. Smaller developers typically finish and sell projects to finance their next efforts, a strategy that could be foiled by this truncated timeline.
“There is going to be consolidation, because the larger entities will buy out projects developed by smaller ones that cannot continue to bring them forward,” said Pochtaruk.
Besides the impending blows to domestic demand, a few other variables could skew the fate of the solar manufacturing renaissance.
For one thing, manufacturers will have to navigate the new FEOC rules themselves, proving they are not beholden to China in order to claim the 45X manufacturing credit. The firms who spoke with Canary Media said that, right now, doing so seems manageable, but a lot depends on how the final IRS guidance is written. The Treasury Department has until the end of 2026 to issue rules, according to the budget law.
Despite the uncertainty, some are very confident they’ll make do.
“Our optimism comes from having spent the last six or seven months working through these issues,” said Gold, whose company moved to ensure U.S. control of the factory before Trump took office. “We could give a workshop on how to achieve compliance, by this point. We’re not going to, because we want a competitive advantage, but we could.”
Not everyone is so sanguine. One alarming scenario would be if the administration uses new FEOC rules to launch investigations into clean energy manufacturers or developers. Ossoff deemed that a clear danger.
“It’s the most corrupt administration in American history, and they will wield implementation as a political cudgel,” Ossoff said. “They’ll pick winners and losers based on political considerations.”
As if to underscore that exact point, the White House published an executive order last Monday that targets the very credits that Trump had signed into law three days prior. The order specifically raises the possibility of the Treasury Department “restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.” Those safe-harbor rules are the same ones providing something of a lifeline to the American solar factories over the next few years. The solar industry is watching this measure intently to see how it affects the already-distorted outlook for the market.
“This is a longstanding, well-established set of practices,” Carr said of the IRS safe-harbor rules. If something happened to upend that established precedent, “basically everybody in the industry would sue pretty much immediately.”
Should manufacturers make it through the near-term turbulence, they’ll still have to figure out what happens to the solar market after the current tax credit-fueled runway peters out around 2030. That future could always involve a policy swing away from the current trajectory.
Over the last decade, solar tax credits have shown a Houdini-esque ability to bounce back from certain death through last-minute legislative maneuverings. But if this latest death proves more enduring, the industry will have to transition to a model that doesn’t revolve around monetizing tax credits. That change will be scary and uncertain for companies, but it would bring the U.S. market closer to the global norm.
“There will be no tax equity — there will be equity and debt, like on all projects in the rest of the planet,” Pochtaruk said. “There’s no tax credits in Chile, in South Africa, in Australia, in Namibia. Pick a country where solar is the most-deployed power generation source; [it’s happening] with no tax credits.”
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