Solar policy – The U.S. solar industry entered September with a wave of major policy developments at the federal and state levels. From revised federal guidance on the Investment Tax Credit (ITC) to state battles over net metering and renewable standards, these updates will shape the trajectory of solar deployment nationwide.
Treasury tightens safe harbor for solar ITC
On August 15, the U.S. Department of the Treasury issued new guidance modifying how large solar projects can qualify for the federal Investment Tax Credit (ITC). The update, made in response to a July executive order from President Donald Trump, restricts projects larger than 1.5 MW from using the long-standing 5% safe harbor rule. Instead, large projects must now rely on the more stringent Physical Work Test, which requires developers to demonstrate measurable on-site construction progress to secure eligibility.
While smaller projects under 1.5 MW may still rely on the 5% expenditure rule, industry groups warn that the change will add compliance burdens for utility-scale projects and could delay investment decisions. The guidance takes effect September 2, 2025, though it is not retroactive.
New tariffs on Indian imports
Separately, President Trump issued an August 27 executive order imposing new tariffs on all imports from India. The broad 25% tariff package is intended to penalize India for continuing to purchase oil from Russia, and comes on top of reciprocal tariffs announced in April 2025, also set at 25%.
Industry analysts note that the combined tariffs could complicate supply chains for solar developers sourcing modules and components from India, particularly at a time when U.S. trade officials are already pursuing antidumping and countervailing duty investigations into solar cells and modules from India, Indonesia, and Laos.
Interconnection reform drives record progress
A Wood Mackenzie report confirmed that interconnection reforms are having a measurable impact. In 2024, U.S. grid interconnection agreements rose 33% year-over-year, reaching 75 GW, the highest volume on record.
The report highlights the Electric Reliability Council of Texas (ERCOT) as a leader in streamlining processes. ERCOT’s “connect-and-manage” approach to grid integration allows faster connection and higher success rates compared to other regional transmission operators, which often struggle with long backlogs.
CALSSA seeks penalties for interconnection delays
In Sacramento, the California Solar & Storage Association (CALSSA) filed a formal complaint with the California Public Utilities Commission (CPUC) in August, accusing major utilities PG&E and Southern California Edison (SCE) of violating state-mandated interconnection timelines. The association is seeking $10 million in fines, arguing that delays have obstructed timely installation of residential and commercial solar systems.
NEM 3.0 faces new legal challenge
The future of California’s net metering policy (NEM 3.0) is again uncertain. In early August, the California Supreme Court unanimously ruled that a lower court must reconsider its prior decision to uphold the controversial program. The case, brought forward by clean-energy advocates, will now be re-litigated on the grounds that NEM 3.0 may conflict with state laws requiring net metering policies to support rooftop solar market growth.
Nevada governor presses for solar development
On August 4, Nevada Governor Joe Lombardo sent a letter to Interior Secretary Doug Burgum urging the Department of the Interior to provide guidance on restrictive solar permitting standards imposed on federal lands. Lombardo emphasized that three major solar projects intended to serve Nevada’s largest utility are currently stalled, warning that the freeze undermines state energy goals.
Arizona moves to repeal renewable standard
In Phoenix, the Arizona Corporation Commission voted in August to begin repealing the state’s Renewable Energy Standard and Tariff (REST). Originally passed in 2006, REST requires utilities to source at least 15% of their electricity from renewable energy by 2025.
Critics argue that rescinding the requirement will slow clean energy adoption in Arizona, while supporters of the repeal cite reduced regulatory burdens and cost concerns for utilities and ratepayers.
Maryland funds SolarAPP+ permitting
The Maryland Energy Administration announced a $3.9 million SolarAPP+ Implementation Grant Program designed to assist counties and municipalities in adopting automated permitting software for residential solar systems. The SolarAPP+ platform, developed by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL), provides instant online approvals for standardized rooftop projects, reducing delays and administrative costs.
New Jersey expands solar and storage
In Trenton, Governor Phil Murphy signed two major bills in August supporting solar and storage deployment. The first measure authorizes 3 GW of new community solar capacity, set to open on October 1, 2025. The second establishes the Garden State Energy Storage Program, intended to accelerate development of grid-scale energy storage and improve system resilience.
Outlook
From federal tax credit revisions to state policy shifts, September 2025 marks a pivotal month for U.S. solar development. Industry stakeholders now face a patchwork of new compliance obligations, litigation, and incentives that will shape project economics and deployment strategies over the coming years.