December 10, 2024
By Wilson Chang | CEO | Sunrock distributed generation
As the Trump administration returns for another term, the solar industry is entering a new chapter full of challenges and opportunities. This article examines the prospects for solar under the incoming administration, and discusses how potential policy changes, including tariffs, support for domestic manufacturing, and the growing role of solar and battery storage for energy security in red states, could shape the future of the sector shaping.
The solar industry has matured significantly since the last Trump administration, with distributed solar now the most competitively priced energy source in many parts of the United States. Despite potential policy headwinds, the sector’s fundamentals remain robust. Solar energy and storage technology continues its relentless march toward higher efficiency and lower costs, while consumer energy prices are on an upward trend.
As the Trump administration returns for a second term, the U.S. solar industry is on much stronger footing than before. Solar panels are increasingly being produced in the United States and energy demand is increasing dramatically, driven by a digitalizing world, electric vehicles and Silicon Valley’s insatiable appetite to build ever more powerful and energy-hungry AI.
This strong foundation is reflected in data from the Solar Energy Industries Association (SEIA), which reports that solar contributed 67% of all new electricity generation capacity added to the U.S. grid in the first half of 2024. Domestic solar energy production, boosted by federal incentives, has quadrupled in recent years, allowing the U.S. to meet solar energy demand with American-made panels.
Unlocking American innovation
The Trump administration’s energy policy will differ from that of its predecessor, with an emphasis on reforming the IRA to align with Republican priorities. While some adjustments may reduce the scope of the IRA, the emphasis on developing domestic manufacturing and energy infrastructure is likely to remain. Energy security is national security.
The application of American ingenuity to solar panel manufacturing and technology will greatly benefit the solar industry. American companies are among the best in the world for R&D innovation. First Solar, an American solar manufacturer, has invested significantly in improving the performance of thin-film photovoltaic modules, at times surpassing a market capitalization of $20 billion.
American technological innovation is able to compete with the ruthless cost-cutting approach of global competition, especially as solar systems integrate storage and develop advanced microgrid and grid support capabilities.
Red states and the rise of solar jobs
Red States are quickly emerging as leaders in solar energy and storage production and adoption, creating good-paying jobs that improve living standards. Texas installed 5.5 GW of solar capacity in the first half of 2024, nearly double Florida’s 2.9 GW. This increase highlights the role of solar energy in energy security, especially as extreme weather conditions increasingly strain the electricity grid.
SEIA predicts that 39,000 new manufacturing jobs will be created by 2033 as a result of federal policy, with many of these jobs ending up in red states. The deployment of solar energy and battery storage systems in these regions is critical for resilience to climate-related disasters.
As solar energy production and installations increase, the sector faces a critical challenge: a shortage of skilled workers. Qualified installers are in high demand, and the rapid evolution of technology and regulations makes rapid workforce development difficult.
Tariffs will drive continued retail energy inflation
Tariffs in the solar industry are not new — nor are they just a Republican economic lever. In 2012, the Obama administration imposed tariffs of about 36% on Chinese solar manufacturers under anti-dumping and countervailing duties.
While tariffs can boost domestic production, they also risk increasing energy costs for consumers, especially if the tariffs are applied broadly. Past experience and empirical evidence indicate that consumers often bear the brunt of tariff-related price increases. As the cost of imported electrical equipment rises, utilities are not structured to reduce their margins. Their incentive is to pass on consumer energy rate increases to commercial, industrial and residential ratepayers.
In an environment where retail energy prices are rising, distributed solar systems are becoming an increasingly valuable asset, offering a cost-effective and resilient alternative. Even in the face of tariffs – a challenge the solar industry has faced and thrived on for more than a decade – distributed solar remains a compelling solution, reinforcing its role as a key driver of energy independence and affordability.
Storage: the cornerstone of the distributed digital network
The increasing frequency of extreme weather events, such as Hurricane Helene’s devastation of Asheville, North Carolina, underscores the need for energy storage solutions. Helene caused catastrophic flooding, resulting in mudslides, power outages and a clean water supply crisis. Our EPC partners have experienced it. Our technicians live there. Some residents had their power cut from the traditional electricity grid for more than two weeks. However, many of our customers with rooftop solar and battery systems have never lost power. This resilience demonstrates how localized solar solutions can protect communities from extreme weather and provide critical stabilization to the electric grid.
The need for grid resilience is also transforming the financial returns of batteries by allowing decentralized storage assets to provide valuable grid services and be compensated for through virtual power plants (VPP). This allows decentralized energy storage assets to be aggregated into a unified resource, enabling complex services such as frequency regulation, peak load reduction, standby capacity and electricity price arbitrage for asset owners.
Software is eating the network
By integrating software controls into our energy systems, advanced VPP platforms enable dynamic control and optimization of energy storage systems based on real-time network conditions, demand forecasts and energy market prices. These platforms provide more granular control over when and how stored energy is released, optimizing both financial returns and network reliability.
The Rocky Mountain Institute estimates that VPPs could be responsible for 60 GW of peak demand in the United States by 2030. As battery technology improves and software capabilities expand, solar companies like ours are transforming into technology-driven platforms that use software to optimize asset returns across large fleets of distributed assets.
2025: the year of resilience for the solar energy sector
Uncertain energy policies, rising retail energy costs and grid vulnerabilities are not just abstract challenges; these are issues that impact the local businesses and nonprofits that are the backbone of our communities. As the energy sector faces policy changes, an aging electricity grid and rising energy demand, there will be clear opportunities in 2025 to redefine the way energy is generated, stored and used – starting at the local level.
Resilience must be built locally and widely distributed. Whether it’s a school reducing costs to invest in education or a local business reducing its carbon footprint while saving costs, Sunrock and our partners are bringing solar and storage solutions together where these are most needed.
Wilson Chang is CEO of the solar and storage development and management platform, Sunrock distributed generation. After spending his career investing in and starting clean energy and technology companies, Wilson was previously a partner at Hudson Sustainable Group, where he invested in climate technology companies and solar projects. He also co-founded Sunlight Financial, a leading residential solar financing platform that went public on the New York Stock Exchange in 2021, and co-founded Sunstone Credit, a leading commercial solar financing platform.
Tags: distributed generation, Sunrock distributed generation