Homeowners risk missing out on solar tax credits

The big red billboard planted by a solar company alongside a Southern California freeway warns passersby that the “Solar Tax Credit Is Expiring,” beckoning homeowners to install solar panels and batteries before the Trump administration eliminates the generous incentive on Jan. 1. 

The deadline has helped drive a big spike in business for solar installers as buyers rush to qualify for the 30% tax credit before it disappears. But California installers said lengthy utility permitting times could imperil customers’ tax credits if their systems aren’t in place by Dec. 31.  

“Clients are concerned about potentially missing the tax credit deadline,” Anthony Del Bene, a manager at Berkeley solar installer A1 Sun, said in an email. “We explained that we would do everything possible to meet this timeframe [but] given the delays we’re seeing, I can’t say I feel completely at ease.”

U.S. homeowners already pay more for solar and wait longer for installation than Australians and Europeans due to a byzantine permitting system, which varies from city to city and utility to utility. Now, with the sun setting on the federal tax credit, delays that prevent  solar and battery installations until after Dec. 31 could cost homeowners $10,000 more for a typical project. 

Emily Walker, director of insights at Boston-based solar marketplace EnergySage, said permitting has been a barrier in the U.S. long before the current solar stampede. “Installers are working around the clock to meet the rush, but most have stopped promising year-end completion due to limited bandwidth and increasingly long and inconsistent permitting timelines,” she said in an email.

An Internal Revenue Service spokesperson said that to qualify for the tax credit, homeowners need to complete installation of solar and battery systems by Dec. 31. For those installing both, a finished system often must include the attachment of a device called a meter socket adapter to their utility meter to connect solar and battery components without expensive electrical upgrades. 

That creates a particular bottleneck in California, the nation’s largest solar market. Nearly 60% of new residential solar installations in the state include batteries compared to 40% nationally, according to the U.S. Energy Information Administration, and utilities typically install the meter socket adapters. 

Solar executives said it can then take up to a month or more for utilities to connect an installed system to the power grid, but that’s no longer a requirement to receive the tax credit.

Kevin Luo, policy and market development manager at industry group California Solar & Storage Association, said the race to go solar before the tax credits expire has only exacerbated longstanding permitting delays at two of the state’s big investor-owned utilities, PG&E Corp. and Southern California Edison.

“They had not prepared sufficiently for that even though they knew it was coming,” he said. 

Lengthy municipal permitting times are also making it a gamble for homeowners trying to qualify for federal tax credits. “Many jurisdictions take weeks and sometimes months to approve permits for solar and battery systems, and that has caused significant delays in getting systems installed before the end of the year,” said Jake Hassid, managing partner at Northern California installer Simply Solar. 

Bill Russell, a manager at solar installer NRG Clean Power in the Los Angeles area, said it’s taking Southern California Edison six to 10 weeks — four times longer than other utilities — to install meter socket adapters, putting customers’ ability to qualify for the 30% tax credit “in serious jeopardy.” 

Southern California Edison spokesperson Jeff Monford said the utility has experienced “significant delays” in installing the devices between September and November due to a jump in applications from homeowners as the tax credit deadline approached. The utility is working to “speed up the process, enabling customers to receive their tax credits,” he said. 

PG&E  spokesperson Mike Gazda said the time to process meter socket adapter applications and install the devices was nine days in October and November, but several installers said they’re experiencing weeks or a month-long delay. 

Barry Cinnamon, chief executive officer of Bay Area installer Cinnamon Energy Systems, said he launched a marketing campaign urging potential customers to “hurry up” after the enactment of the Trump administration’s tax bill in July scuttled tax credits and rebates for renewable energy, heat pumps and electric vehicles. That resulted in record sales, and Cinnamon hired more installers to handle the demand. 

To avoid waiting for the utility to install meter socket adapters, he switched to a more expensive gadget called a gateway, which performs the same function but can be deployed by the installer. Otherwise, “we’re not going to be able to complete the installation in time now because we will have that delay from the utility,” said Cinnamon.

Solar installers said they haven’t experienced permitting delays with California’s other big utility, San Diego Gas & Electric Co. SDG&E spokesperson Anthony Wagner said on average the utility connects a residential solar system to the grid in three days. It processes meter socket adaptor applications in two days and a contractor performs the installation.