Solar Incentive Update: Are Federal and Local Solar Incentives at Risk Under the Trump Administration?

Many prospective solar customers and industry professionals are wondering how solar incentives may be impacted by a Trump administration, especially given the administration’s past stance on environmental and sustainability policies. With rumors of sweeping reforms and budget cuts, it's fair to ask: will the solar industry face setbacks? 

Federal Solar Incentives – A Closer Look 

At the federal level, the key incentive is the Investment Tax Credit (ITC), which covers 30% of the cost of a solar energy system. This applies to both residential and commercial installations. 

Thanks to the Inflation Reduction Act of 2022 (IRA), businesses may qualify for additional credits: 

• +10% if domestic solar components are used 

• +10% if the system is installed in a low-income community 

Homeowners qualify for the base 30% tax credit, originally introduced under President George W. Bush in 2005. 

Despite changes during his 2017 administration, President Trump did not alter the solar tax credit. While he cut funding to some clean energy programs, the ITC remained untouched. 

Importantly, solar incentives have historically had bipartisan support, and the 30% credit is guaranteed through 2032, before it decreases to: 

• 26% in 2033 

• 22% in 2034 

What About Trump’s Current Stance? 

President Trump’s recent executive actions have focused more on wind energy and electric vehicles than solar. In fact, he has publicly supported rooftop solar panels by saying, “I’m a big fan of solar” during the 2024 presidential debate.  

Trump did recently order federal agencies to pause distribution of the IRA fund, but it's unclear if this will impact solar incentives directly. Any full repeal of the IRA would require congressional approval, and such a move is unlikely given its bipartisan support. 

So, if you're considering going solar in 2025, you’ll likely still benefit from the 30% ITC, as any major changes wouldn’t take effect until at least 2026. 

State-Level Solar Incentives: Maryland and Washington, D.C. (SRECs) 

In states like Maryland and D.C., solar owners benefit from Solar Renewable Energy Certificates (SRECs). For every megawatt-hour (MWh) of solar electricity produced, homeowners earn 1 SREC, which can be sold separately from the electricity itself. 

SREC markets are governed by each state’s Renewable Portfolio Standard (RPS), which mandates that utilities source a portion of electricity from solar. 

SREC Market Snapshot 

• 1 SREC = 1 MWh of solar production 

• 10 kW solar system ≈ 12 SRECs/year 

• SRECs are sold to utilities needing to meet RPS targets 

• Market value is driven by supply and demand 

• Unmet RPS targets result in utilities paying a fine called the Alternative Compliance Payment (ACP) 

Current SREC Market States (as of 2025): 

• Illinois, Ohio, Pennsylvania, Massachusetts, New Jersey, Delaware, Virginia, Maryland, and D.C. 

D.C. SREC Market: Signs of Trouble 

While federal incentives are more stable, the D.C. SREC market faces several challenges: 

1. Oversupply Risk 

By 2023, D.C. hit its solar generation targets, creating excess SRECs and causing prices to fall. Although the city raised its solar RPS goal from 5% to 10% by 2041, the annual increases are minimal. Given rapid solar adoption in D.C., oversupply may soon return. 

2. Decreasing ACP Values 

The ACP, the fine paid when utilities don’t meet RPS targets, is dropping: 

• $500 (2023) 

• $480 (2024) 

• $460 (2025) 

• Down to $300 by 2032 (through 2041) 

Since SREC values are often linked to the ACP, this downward trend is expected to lower prices further, even without oversupply. 

3. Policy Changes and Market Manipulation 

In 2023, D.C. Mayor Muriel Bowser changed the city’s contract with WGL, its electricity supplier, to stop buying SRECs and instead pay the ACP fines. This move, aimed at balancing the city’s budget, pulled a major buyer out of the SREC market and worsened the oversupply issue. 

4. Unabated Solar Growth 

Solar adoption in D.C. continues to boom. Homeowners frequently receive offers and ads for "free solar," often relying on SREC income to justify costs. However, SREC supply is growing faster than RPS demand, and the D.C. Public Service Commission (PSC) has already signaled market oversaturation. 

What Should Homeowners Do? 

The D.C. SREC market may not be sustainable long-term. As values decline and oversupply becomes more likely, counting on SREC income to fund your solar investment is risky. 

Consider solar programs like a Power Purchase Agreement (PPA) where you don’t depend on SRECs to make your system affordable. 

Key Takeaways 

• SREC Outlook: SRECs remain legal through 2041, but values are dropping, and oversupply poses a threat. 

• Federal Tax Credit: The 30% ITC remains secure through at least 2025; changes unlikely before 2026. 

• Component Costs: Bipartisan tariffs on imported panels and inverters may raise hardware costs, so delaying installation could cost you more.