Trump Executive Order 'Has Thrown A Wrench' Into CRE's Financing Plans For Rooftop Solar Projects

Some renewable energy players who help landlords install rooftop solar breathed a sigh of relief when the Trump administration’s tax bill passed July 4. 

The final legislation wasn’t as punitive toward renewables as some earlier proposals, and leaders at solar companies like Aspen Power believed they would soon have the certainty needed to move forward decisively.

Then, on July 7, President Donald Trump pulled out his Sharpie.

He signed an executive order that sought to further restrict access to tax credits for shovel-ready solar and wind projects that would have been able to receive them under the new law. 

“The executive order has thrown a wrench in how we thought things were going,” said Aspen Power Senior Vice President John Lind, whose company leases large rooftops and tracts of land for solar projects in 26 states.

“Our industry was in a state of hope and confusion prior to the bill being finalized … Now the executive order has again created a bit of confusion. That’s been frustrating.”

The tax bill shortened the eligibility window for a 30% federal tax credit that companies like Aspen use to offset the cost of installing solar panels.

Before the legislation passed, entrepreneurs had until 2032 to begin construction using the tax credit. With the law, projects must be under construction before July 4, 2026 and “placed in service” by the end of 2027 to qualify.

And Trump’s Monday executive order aims to put additional constraints on what starting construction means in this context.

Until this week, projects where 5% of the system costs have already been incurred were considered under construction for the purposes of the federal tax credit. The executive order aims to axe that safe harbor mechanism “unless a substantial portion of a subject facility has been built.”

It’s not clear exactly how it will be implemented.

Lind and the rest of the solar industry are waiting for guidance from the Department of the Treasury, which is due 45 days after the bill was signed into law July 4.

Solar entrepreneurs are now rushing to expedite their projects, which has led to a boost in activity at Aspen.

“There’s been a lot of interest in us stepping in to help finance systems to accelerate the process,” Lind said.

Aspen helps CRE players use rooftop solar to create new streams of revenue that can be invested back into their core business. The company offers a few different paths to make that happen.

The firm can build a new array of panels on a client’s roof and use community solar or power purchasing agreements to sell that electricity to a third party. Aspen will pay the property owner rent for the opportunity to do this.

“We’re going to fully finance that system and maintain it through the term,” Lind said. “The landlord just treats us like a tenant.”

Aspen will also buy existing rooftop solar systems and pay the property owner rent for the opportunity to continue operating. This makes a lot of sense for property owners with older systems in need of maintenance, Lind said. 

“We’ll take that on, repower it, make it optimally performing,” he said.

Aspen also shoulders the task of building out the complex capital stacks for these projects, which are sourced from a mix of local and federal incentives, traditional banks and its equity partner, Carlyle.

There is geographic variation in the amount of money a landlord can expect to make through one of these arrangements due to the different local tax incentives in place.

A 1-megawatt system on a 100K SF property in Burlington County, New Jersey, could field $100K per year, Lind said. Across the river in Bucks County, Pennsylvania, a more modest suite of incentives means a similar project would only earn about $10K per year.

But the federal tax credit has still been making a difference in the Keystone State, said Philadelphia Energy Authority Director of Commercial Programs Lisa Shulock.

The agency runs the Solarize Greater Philly program, which was initially focused on homeowners when it was formed in 2017. PEA expanded it to commercial owners in 2022 and completed about 20 projects in that sector by 2024, Shulock said.

Federal tax credits like the one underpinning Aspen’s work have been in place for years, but Solarize Greater Philly’s expansion into the commercial realm came around the same time the Biden administration’s 2022 Inflation Reduction Act extended them through 2032.

Losing those credits isn’t a death knell for solar projects in Southeast Pennsylvania, but “it will make the financials a little more challenging,” Shulock said.

Lind agreed that there will likely be some pain, but he still had an optimistic outlook.

“Our industry will also eventually tune itself to operating without the [investment tax credit],” he said.

Aspen will now focus on projects that seem most likely to meet the looming tax credit deadline.

“It’s going to cause all of us to really scrutinize,” Lind said. “Can we hit the gas and naturally build that project before 2027?”