The passing of the 2025 budget reconciliation bill into law comes during a pivotal time as solar energy and domestic manufacturing in the U.S. are experiencing historic growth and momentum.
Rising Energy Prices
Make no mistake, this law will raise energy prices for consumers across the country at a time when people are already struggling with rising utility bills. This law will also make it more expensive to bring new electricity online to meet expected surges in demand. And notably, it will severely undermine the nation’s rooftop solar industry, killing projects that provide critical local grid support for the nation’s distribution utilities.
After years of hard-earned progress, the whipsawing of federal policy on clean energy tax credits threatens to push developers, utilities and innovation to the sidelines.
Innovation Is Key to Meeting Energy Demand
Although the law will result in significant disruption to the industry, it may also encourage the solar and storage industries, as well as their host industries, to innovate. The business models of the past are not going to work for many firms now.
Experts at the Solar and Storage Industries Institute are meeting this moment and are ready to help the solar industry innovate and overcome one of its greatest challenges — rising soft costs.
Lowering Soft Costs
A portion of overall costs of solar and storage projects include “soft costs” – any costs that are not associated with project hardware such as panels and inverters. And that’s our wheelhouse. SI2 is working to advance energy innovation to help drive down project costs and accelerate the adoption of clean energy projects to meet rising energy demand.
Local processes for siting and permit activities for example, are increasingly becoming a major driver for large-scale solar project costs.
Recent analysis shows that 75% of utility-scale solar cost increases have come in the form of soft costs.
That is why SI2 is partnering with Stanford University, the Nature Conservancy and the Solar Energy Industries Association, to develop strategies, tools and guidance to lower siting and permitting soft costs and lead to better outcomes for projects and communities. Our experts are also looking at the ways different community engagement strategies can impact how communities respond. The developed framework will be tested in 6-9 communities around the nation.
Innovation and Grid Interconnection
Also, keep in mind that soaring interconnection costs is another area ripe for innovation and cost reduction for both large scale and distributed clean energy projects. Costs and delays related to connecting solar and storage projects to the grid are skyrocketing .
Recent analysis shows that since 2020, 52% of residential solar pv pricing increases have come in the form of soft costs.
SI2 is leading research that explores “flexible” interconnection, or tools that better match a project’s output to grid conditions. Results in our latest flexible interconnection report show that utilities will not have to wait for expensive infrastructure upgrades, allow community solar projects to connect faster to the grid, and can boost revenue for community solar developers by up to as much as 176%.
Another aspect of our work involves building on our large-scale interconnection reform proposals released in 2024 and showing how our “entry fee” proposal would impact real projects.
Innovation is central to the American experience.
How else did we put people on the moon, develop hand-held computers that have changed our lives forever, and invent medicines and lifesaving medical breakthroughs. We do not back away from a challenge. Now it is time to unleash innovation again in the clean energy arena.
SI2 is committed to reporting on and advancing the tools, models, and breakthroughs that can help this industry meet the moment.
