HARRISBURG — Renewable energy developers say that the rollback of billions in tax credits for their industry will lead to higher costs for consumers, especially as the influx of data centers into Pennsylvania increases demand for power.
In July, President Donald Trump signed “big, beautiful” legislation that extended tax breaks to high earners by cutting federal funding for Medicaid and other social services.
The law also rolled back Biden-era tax credits for the renewable energy industry and homeowners making energy-efficient renovations.
Two of the largest tax credits — for building clean energy projects or generating power with low emissions — are now set to expire by the end of 2027, rather than nearly a decade later.
Experts say this will slow the growth of renewable energy projects and reduce the amount of power generated in the state, resulting in higher electricity bills for consumers. One report projected an annual increase of $130 per Pennsylvania household by 2030.
Rolling back these tax credits is just one part of the Trump administration’s move to crack down on the clean energy industry. Recently, Trump directed his U.S. Treasury secretary to issue guidance on the tax credit rollback process, and clean energy developers fear this will make it harder to claim the credits before they expire.
Currently, developers can claim credits for existing projects that begin construction before the end of 2026 or start operating before the end of 2027. And while those who spoke with Spotlight PA were hopeful about the industry’s long-term growth, developers said increased upfront construction costs in the short term will drive away business.
Aaron Nichols, a research and policy expert at Exact Solar, a Bucks County solar panel installation company, said the repeal of the tax credits is “less than ideal for clean energy companies.”
His company focuses on small-scale residential and commercial installations. Nichols said business has surged since the passage of the federal bill, driven by individuals rushing to claim a tax credit for residential installation before it expires at the end of the year.
“Homeowners who were kind of on the fence to invest in home solar are now doing it just as fast as they possibly can,” Nichols told Spotlight PA.
For long-term stability, his company is shifting its focus to tax credits with greater longevity. For instance, it is expanding its leasing program. The project lets companies pay the upfront construction costs of setting up solar panels on residential homes; homeowners get cheaper monthly electricity costs, and businesses can claim the production and investment tax credits.
Nichols predicted that the solar industry will continue to grow with or without tax credits, due to a significant rise in energy demand. Although the rollback of tax credits may temporarily slow business, Nichols thinks it won’t halt the industry’s growth.
“I think there’s going to be a short period where a lack of incentives is going to matter,” Nichols said of the tax credits. “And then I think we’re just going to keep going.”
Large-scale energy developers who build solar farms face a different set of challenges. They say the tax credit rollbacks won’t affect current projects but will make financing future work more difficult.
Edward Shelton, vice president of development at Vesper Energy, a Texas-based renewables developer that generates power for the grid, expects fundraising to become trickier. With tax credits available, developers need less initial funding to start a project.
“I can’t say that it won’t slow things down,” Shelton said. “Will it completely stifle the industry? It remains to be seen.”
Vesper is currently developing a solar farm in Bradford County that is expected to generate dozens of megawatts of power — roughly enough energy to power 120,000 homes for a year. The company also operates four other solar projects in the state. Shelton said the Bradford project is on track to break ground in time to qualify for the tax credit.
Developing projects takes five to six years, Shelton explained, during which the economic incentive landscape can shift. Tax credits could be reinstated, or equipment prices could fluctuate, making financing difficult to predict.
“If the tax credits were there, would we site even more projects? We probably would,” Shelton told Spotlight PA. “But it’s not like we are just stopping development of any early-stage project that we have.”
Matt Litchfield, vice president of external and regulatory affairs at Maryland-based natural gas and renewable energy developer Competitive Power Ventures, echoed Shelton, saying that tax credits will influence financing rather than project planning.
“It changes the pool of who and where is investing in the project, but it doesn’t change the overall investment figures themselves,” Litchfield said.
While You’re Here
Spotlight PA’s nonprofit reporting is a free public service, but it depends on your support. Give now to ensure it can continue.
He noted that similar tax credits have expired before only to return a few years later, and said he has “no reason to think that will be any different” in this case. Considering increased energy demand from data centers, Litchfield said, he doesn’t think that “anyone is going to be choosy when they’re going to power their data centers,” regardless of any changes from the rollback.
Consumer electricity prices are already increasing as demand outstrips supply.
Sunsetting the tax credits further handicaps the industry at a time when the state needs more energy, said Evan Vaughan, the executive director of the Mid-Atlantic Renewable Energy Coalition, an organization representing utility-scale developers. He added that the increased costs to developers will be “baked in” to electricity prices for consumers for “several years to come.”
“It’s not a ‘sky is falling’ moment for wind and solar, but it does introduce new challenges and new uncertainty,” Vaughn told Spotlight PA. “We need certainty around building more energy if we’re going to win the AI race and if we’re going to keep prices reasonable for consumers.”