Big changes are underway for Connecticut’s residential solar market as a result of recent policy shifts at both the state and federal level. What that means for homeowners interested in going solar depends on the type of system they’re interested in, household usage and personal finances. As of Jan. 1, the federal government is no longer offering tax credits worth up to 30% of the cost of a new solar residential system. Those tax credits were enacted under President Joe Biden’s administration and eliminated under the One Big Beautiful Bill Act signed by President Donald J. Trump in July. With a typical rooftop solar setup in Connecticut costing upwards of $30,000, those credits were worth $9,000 or more on a system purchased up front by a homeowner. Systems that are leased or subject to third-party power purchase agreements are still eligible for a separate, commercial tax credit until Dec. 31, 2027. However, in order to qualify for those incentives, solar systems will have to comply with new rules put in place by the OBBA limiting the amount of foreign-manufactured parts from countries like China. Those rules are expected to increase the price of panels, in addition to the loss of any available tax credits. How has the loss of the federal incentives impacted the solar market in Connecticut? Jason Calabrese, the operations manager at Middlebury’s Ion Solar Pros, predicted that sales would drop between 20% and 25% in 2026 as a result of those changes and the uncertainty they have brought to the solar market. “A good portion of it’s based upon customer confusion,” Calabrese said. “Some people think that solar is ending altogether, that there’s no opportunity now to go solar. It’s created some uncertainty in the marketplace, which uncertainty in any marketplace is not good for sales.” In the aftermath of the OBBA’s passage, several solar installers and financiers around the country shut down or filed for bankruptcy. In Connecticut, the fallout has been limited to two companies — PosiGen and Sunnova — according to Mike Trahan, the executive director of the Connecticut Solar and Storage Association. Trahan noted that even before the law, more than two-thirds of new solar systems being deployed in Connecticut were owned by third parties. For those residents who still want to own their own systems, Trahan said the loss of the federal tax credits had forced developers to work with banks to create new financing options. “It’s become an interesting time, I’ve been hearing from people and how they are trying to figure out new products, new lending, loan and sales products, to consumers,” Trahan said. What state-level policies are changing? In addition to the loss of federal tax credits, Connecticut’s Public Utilities Regulatory Authority in December approved several changes to its residential and commercial solar programs. One of the most notable changes was a 704% increase in the charge assessed on the output of residential solar systems, from half-a-cent per kilowatt hour to more than 4 cents a kWh. That increase was dictated, in part, by state lawmakers in order to better align the cost of rooftop solar incentives with the state’s rising price of electricity. Their legislation, Senate Bill 4, was passed before the changes to the federal tax credits. While PURA did consider offering additional incentives for individually-owned systems to offset the loss of the federal tax credits, the commissioners ultimately opted not do so due to the cost and administrative effort required to create those incentives for a limited time period. Trahan said that he is planning to ask PURA to reconsider its decision in early 2026. If the new state charges go into effect along with the loss of federal tax credits, the result for system owners is that it could take another four or five years to recoup their initial investment, according to Sean Riel, the director of residential sales at Ellington’s Earthlight Technologies. Still, he said he remained optimistic that leasing would be seen as viable alternative for customers over the next two years. “If you’re going with a lease, the pitch there remains the same: that you’re going to be locking in a lower rate for power through purchasing solar energy versus paying the utility,” Riel said. PURA did increase price caps and other incentives for non-residential solar systems in 2026 in order to account for the loss of the federal tax credits. Another change taking effect on Jan. 1 is a new state law dictating that most condo complexes can no longer “prohibit or unreasonably restrict” owners of single-family, detached units from installing solar panels on their roofs. Complexes that wish to opt out of the new requirements must do so by Jan. 1, 2028 with a three-quarters vote of their board. Andrew Belden, vice president for renewable programs and strategy at Eversource, said that it remains to be seen how customers and the solar industry react to the shifting state and federal policies. “The industry hasn’t metabolized a change like this, ever,” Belden said. “So, 2026 will be a year when we’re going to find out a lot about how the market is going to react to changes. What we always suggest for customers is to treat solar installation as you would any other home improvement project: shop around, ask questions. There are likely good deals to be had, but there are also challenges.” ...read more read less