A Brief History of Solar Policy

As we step into 2025, it’s time to reflect on the major policy developments that have shaped the solar industry over the past half century. Solar energy has come a long way, but our work is far from over. We must keep building on the successes of the past 50 years to meet the challenges ahead. Here’s to a solar-friendly and healthy 2025!

1970s: Crisis, Early Days and Legislation

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The story of solar energy policy in the United States begins in the 1970s, a turbulent decade marked by the oil crises?of 1973 and 1979. These energy shocks jolted the nation into recognizing the dangers of overreliance on foreign oil, sparking an urgency to explore alternative energy sources. Amid this backdrop, the U.S. government began to lay the groundwork for a renewable future.

One of the earliest and most significant pieces of legislation was the Public Utility Regulatory Policies Act of 1978. PURPA encouraged the development?of renewable energy by requiring utilities to purchase electricity from small, independent power producers if the cost was less than or equal to the price of generating the electricity themselves. For the first time, small-scale solar and other renewable energy sources had a legally supported pathway into the grid. While the impact on brownfields was not yet apparent, PURPA’s legacy established a principle of market access that would benefit future solar projects.

What Other Policies Changes Came into Play?

• Solar Energy Research, Development and Demonstration Act: This 1974 act established federal funding?for energy research and development to utilize solar energy as a major source for U.S. energy needs.
• Solar Energy Research Institute: Established in 1977 (now known as the National Renewable Energy Laboratory, or NREL), SERI became a focal point?for solar energy research, indicating a growing recognition of the need for alternative energy sources and a commitment to fostering innovation in clean energy technologies. ?

View from the Oval Office

America is “harnessing the power of the sun to enrich our lives as we move away from our crippling dependence on foreign oil.” -President Jimmy Carter, 1979

1980s: Slow Growth and Tax Credits

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The 1980s were marked by reduced federal support for solar energy under the Reagan administration, which rolled back many of the incentives established during the 1970s energy crises. Lower oil prices reduced urgency around energy conservation and alternative energy sources, leading to diminished focus and investment in solar technologies. In 1986, in a move that would turn into a foreboding symbol of the rising politicization of renewable energy, President Ronald Reagan removed the solar panels that adorned the White House roof, installed by President Carter seven years earlier. Despite this, advancements in solar technology continued, albeit at a slower pace, and several states began to adopt their own renewable energy goals.

What Other Policies Changes Came into Play?

• Federal Tax Credits: The Energy Tax Act of 1978 had introduced?a 30% federal investment tax credit for residential and commercial solar installations, helping some early adopters. But the industry was still small and faced high costs, and the Reagan administration let the policy expire in 1985 along with homeowner tax credits for solar water heaters. Since then, the ITC has been intermittently renewed and expanded and remains a driver of industry demand.
• Research and Development: Some funding for solar R&D continued through the Department of Energy, which invested in developing solar PV technologies, focusing on reducing costs, improving efficiency, and developing new materials. However, funding for renewable energy declined toward the end of the decade as support shifted toward fossil fuels.

View From the Oval Office

“Government is not the solution to our problem; government is the problem.” -Ronald Reagan, 1981

1990s: Building the Foundation

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The 1990s ushered in a renewed interest in environmental sustainability and clean energy. The Energy Policy Act of 1992?was a pivotal moment, addressing energy efficiency and laying a framework?for the diversification of energy resources. This act aimed in part to promote renewable energy development and introduced new incentives for solar, including the Production Tax Credit, which allowed owners of qualified renewable energy facilities to receive tax credits for each kilowatt-hour of electricity generated by the facility over a ten-year period.

What Other Policies Changes Came into Play?

• Electricity deregulation:?Begun in the 1990s, this movement aimed to increase competition in the electricity market, lower prices, and provide consumers with more choices regarding their energy suppliers. Deregulation contributed to the growth of renewable energy markets, as competition created opportunities for independent renewable energy developers.
• Global Climate Awareness and the Kyoto Protocol: The 1990s saw heightened awareness of climate change, culminating in the 1997 Kyoto Protocol. This international agreement was the first to set binding targets for reducing greenhouse gas emissions, motivating countries worldwide to explore cleaner energy sources and adopt renewable technologies.

View from the Oval Office

“In all of these great and worthy endeavors, Government will serve as the partner of private enterprise, not as its master. This approach will allow our Nation to reap the benefits of the greatest single energy resource we possess -- the entrepreneurial spirit of free men and women.” -George H.W. Bush, 1992

2000s: Solar Goes Mainstream

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The early 2000s marked the beginning of a major federal push for renewable energy. The Energy Policy Act of 2005?introduced several critical incentives, but it also reintroduced the Investment Tax Credit for solar energy, which allowed solar project developers to deduct 30% of their installation costs from federal taxes. This tax credit proved to be a game-changer for the solar industry, significantly reducing upfront costs and attracting private investment. The ITC remains one of the most vital policy instruments in the history of solar energy. Although President George W. Bush’s support of fossil fuels was no secret, it didn’t stop him from quietly bringing solar panels back to the White House grounds, a subtle indication of the growing consensus around the technology’s role in America’s energy independence.

The presidency of Barack Obama saw an unprecedented focus on renewable energy and environmental stewardship. The American Recovery and Reinvestment Act of 2009?provided over $90 billion in funding for clean energy, including grants and loans for solar projects. The ITC was extended, and new incentives, like the Section 1603 Treasury Program, allowed developers to receive cash payments in lieu of tax credits, further boosting solar investment.

What Other Policy Changes Came into Play?

• Renewable Portfolio Standards: While federal policies provided overarching support, state governments continued to act as laboratories of innovation. States began adopting RPS policies, requiring utilities to generate a certain percentage of electricity from renewable sources, including solar. In our home state, New York adopted its RPS in 2004, which has been expanded numerous times. Today, NY aims to have 100% carbon-free electricity by 2040 and 70% renewable energy by 2030.
• Technological Advancements, Falling Costs and Increased Investment: Advances in photovoltaic technology, streamlined manufacturing processes and Chinese advances?in solar panel production reduced costs significantly, making solar energy more accessible and affordable for consumers. The sector also saw an increase in investment from both public and private sectors in solar technology research and development.
• Climate Change Awareness: Growing awareness of climate change and environmental degradation drove interest in cleaner energy sources. The public increasingly recognized the importance of reducing greenhouse gas emissions and transitioning away from fossil fuels. Al Gore’s release of the documentary An Inconvenient Truth?in 2006 brought climate change to the forefront of global conversations.

View From the Oval Office

“We're going to help American consumers a lot. We'll help them by diversifying our supplies, which will help lower energy prices. We'll strengthen our security by helping to break our dependence on foreign oil. We'll do our duty to future generations by addressing climate change.” -George W. Bush, 2007

2010s: Massive Growth and State-level Leadership

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The 2010s were pivotal for solar energy in the United States, defined by rapid expansion and significant policy achievements. The extension of the Investment Tax Credit was a cornerstone, sustaining growth by making solar installations more financially viable. This extension provided significant certainty?to investors and developers, leading to increased investments in solar energy projects. The solar industry experienced substantial growth in capacity installations, job creation, and technological advancements following the extension.

Despite challenges such as solar tariffs and net metering controversies, the cost of solar technology dropped drastically, positioning solar as a major energy player. By the end of the decade, solar power had transformed from a niche market into a vital component of the national energy portfolio.

What Other Policy Changes Came into Play?

• Falling Solar Costs: The cost of solar PV panels declined enough to start driving private interest in the solar energy industry. Recognizing this market opportunity amidst planetary need, Annika Colston founds AC Power in 2016.
• State-Level Incentives Increase Momentum: States like California, New York, and New Jersey became leaders?in solar adoption due to aggressive state policies, including rebates, grants, and mandates. Several states introduced or expanded SREC programs, which allow solar energy producers to earn certificates for every megawatt-hour of solar energy they generate. These certificates can be sold to utilities to meet their RPS obligations, further incentivizing growth in the industry.
• Community Solar is Born: Minnesota was one of the first states to enable community solar, which it did in 2013 when it established a program bound to the state’s largest investor-owned electric utility, Xcel Energy. Several states began to explore and implement community solar policies throughout the 2010s, allowing some residents who cannot install solar panels on their property to participate in shared solar projects and access clean energy.

View From the Oval Office

“A lot of Americans are going solar and becoming more energy efficient not because they’re tree huggers … but because they’re cost-cutters. They like saving money … Solar isn’t just for the green crowd anymore – it’s for the green eyeshade crowd, too.” -Barack Obama, 2015

2020s: Accelerating Clean Energy Transition

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Fast forward to the 2020s, and solar policy continues to evolve rapidly. The Inflation Reduction Act (IRA) of 2022 marked a historic investment in clean energy, with significant funding for renewable energy projects and grid modernization. The IRA extended the ITC once again, this time with bonus credits for projects sited on brownfields and other disadvantaged lands. This direct link between federal incentives and brownfield solar development represents a major milestone, acknowledging the unique benefits of such projects.

Yet challenges remain. Grid integration, interconnection delays, and local permitting hurdles still pose significant obstacles for solar developers, particularly on complicated sites like brownfields. Moreover, as the push for energy equity grows, there is an increasing focus on ensuring that solar projects benefit the communities where they are located, especially low-income and historically marginalized areas.

What Other Policy Changes Came into Play?

• Renewable Energy Goals:?As states, municipalities and companies aim to reduce greenhouse gas emissions and battle climate change to take care of communities and the planet, regardless of federal directives, they both expand existing Renewable Portfolio Standards and set new ambitious 100% clean energy goals (e.g., California, New York) with solar as a major component.
• Inflation Reduction Act (2022):?One of the most impactful pieces of legislation for solar energy during Biden’s presidency, the IRA includes comprehensive provisions to boost renewable energy investment. The IRA also restored the 30% ITC for residential, commercial, and utility-scale solar projects. This tax credit is retroactive to projects that started after 2021 and will be in place through 2032.
• Community Solar Expansion:?An increasing number of states pass solar-enabling community solar policies, expanding access to solar energy for those unable to install their own systems. In the beginning of 2020, the U.S. had approximately 2.3 gigawatts (GW) of cumulative installed community solar capacity. As of June 2024, there was approximately 7.87 GW of community solar in operation in the U.S. These community solar projects are located in 44 states and localities, including the District of Columbia. Over three quarters of the total market is concentrated in four states: Florida, New York, Massachusetts, and Minnesota, according to the DOE.
• Industry growth: Solar accounted for?67% of all new electricity-generating capacity added to the US grid in the first half of 2024 and US module manufacturing capacity increased by over 10 GW to 31.3 GW in as more facilities continued to come online. The interconnection between energy independence, national security and a sustainable, livable future continues to grow amidst falling costs in the global political and social consciousness.

View From the Oval Office

“The countries that take decisive action now to create the industries of the future will be the ones that reap the economic benefits of the clean energy boom that’s coming.” Joe Biden, 2021

AC Power is a woman-owned solar developer transforming contaminated properties into clean energy assets that benefit communities and accelerate climate solutions. Our mission is to reenergize communities with solar — one brownfield at a time. Learn more: acpowerllc.com