Don’t Miss the 2025 Solar Tax Credit—Even with Utility Delays

Short answer: If your solar system is fully installed in 2025, you’ll usually be treated as having made your qualifying “expenditure” in 2025 for the federal Residential Clean Energy Credit—even if your city inspection or utility Permission to Operate (PTO) drags into early 2026. Recent IRS guidance ties eligibility to when installation is completed, not when the utility flips the switch.

This blog will walk you through:

• What “installation completed” actually means in IRS language
• How the 2025 deadline works after the latest changes to the tax law
• How PTO delays, AHJ bottlenecks, and utility backlogs affect your eligibility
• Why batteries suddenly matter more than ever under California’s NEM 3.0 / Solar Billing Plan
• How US Power + Qcells can help you navigate all of this and still lock in maximum savings

Why Homeowners Are Stressed Right Now

If you’re a Southern California homeowner, this probably sounds familiar:

• Your solar system is on the roof and basically ready, but you’re still waiting on:
  • City / county final electrical inspection
  • Utility meter swap or PTO letter
• You’ve heard that recent law changes mean the federal solar tax credit ends for new expenditures after December 31, 2025, and you’re terrified a slow inspector will cost you tens of thousands of dollars.
• You’ve also heard about NEM 3.0 / Net Billing, where utilities pay pennies for your extra solar, so everyone is suddenly talking about batteries and “solar + storage.”

The good news: if your installer actually finishes the job in 2025, current IRS guidance says that’s the key date for the credit—not when the utility finally blesses the system with PTO.

Let’s unpack that.

The 2025 Federal Solar Credit: What Changed (and Why It Matters)

The Residential Clean Energy Credit in plain English

The Residential Clean Energy Credit (Internal Revenue Code §25D) lets homeowners claim a 30% federal tax credit on qualifying clean energy systems for their home—like solar panels and battery storage.

For qualifying systems, “qualified expenses” include:

• Solar electric panels
• Battery storage of at least 3 kWh capacity
• Labor for onsite preparation, assembly, and original installation, plus wiring to connect the system to your home.

You claim the credit using IRS Form 5695 when you file your tax return.

The big twist: the One Big Beautiful Bill (OBBB)

In 2025, Congress passed a law nicknamed the One Big Beautiful Bill (OBBB), which accelerated the end date for several energy credits. For the Residential Clean Energy Credit under §25D, the IRS now states:

The credit will not be allowed for any expenditures made after December 31, 2025.

So the key question is now:

When is an “expenditure made” for solar?

That’s where the terms “original installation” and “placed in service” get confusing.

“Original Installation” vs. “Placed in Service” – What the IRS Actually Says

The legal definition of “expenditure made”

The tax code itself (Section 25D(e)(8)) says that, for most residential clean energy projects:

• An expenditure is treated as made when the original installation of the item is completed (unless it’s part of constructing a whole new home, in which case it’s when you first use the home).

The IRS’s 2025 FAQ on OBBB repeats and applies that rule:

• If the installation is completed after December 31, 2025, the expenditure is considered made after that date and you cannot claim the §25D credit, even if you paid in full earlier.

In other words, writing a check isn’t enough; the system must be installed.

So does “original installation” mean PTO?

No—at least not automatically.

The IRS FAQ talks about when installation is completed, not when the system is “placed in service” or when it starts operating for commercial purposes. That “placed in service” language is more common in the commercial Investment Tax Credit rules and large-scale projects.

For homeowners, the IRS’s own Residential Clean Energy Credit page says you must claim the credit for the tax year “when the property is installed, not merely purchased.”

Taken together, current guidance points to this practical rule of thumb:

For a Southern California homeowner, the key date is when your solar + battery system is fully installed and capable of operating, not when your utility finally sends a PTO letter.

That’s a huge relief if your AHJ or utility is backed up.

PTO Delays, Inspections & “Capable of Functioning”

What does “completed installation” look like in real life?

In most residential solar projects, your system is reasonably considered “installed” when:

1. Panels, racking, wiring, and inverters are in place
2. Any battery storage is mounted, wired, and commissioned
3. The system has passed the installer’s internal checks and is capable of being turned on, even if they leave it off pending city/utility approval
4. The work required under your contract is substantially complete (no missing major components, no open roof penetrations, etc.)

Solar professionals often frame it this way:

The system doesn’t necessarily have to be turned on, but it must be capable of functioning safely once energized.

That lines up well with the IRS’s focus on “original installation” as the moment when the item is fully in place, not in some indefinite testing or construction stage.

Where do AHJ inspections and PTO fit in?

For most Southern California homeowners, there are three stages:

1. Physical completion
   • Panels, inverters, batteries installed
   • Wiring and conduit complete
   • System can be energized
2. Final inspection by the Authority Having Jurisdiction (AHJ)
   • City or county inspector signs off on electrical and building code
3. Utility interconnection / PTO
   • Utility (SCE, LADWP, SDG&E, etc.) changes the meter or reviews documents
   • Issues a formal Permission to Operate (PTO) under the current Solar Billing Plan or Net Billing Tariff

From the homeowner’s tax-credit perspective, the most defensible date is usually the one when:

• The system is physically complete and capable of safe operation, and
• Any required local inspection sign-off has occurred (showing it’s legally ready to operate), even if utility PTO is still pending.

The IRS FAQ on 25D doesn’t mention PTO at all—it calls out only the installation completion date as the test for whether an expenditure is made before or after December 31, 2025.

Important disclaimer: This blog is educational and not legal or tax advice. For your specific situation, talk to a qualified tax professional and share your installation docs and dates.

Why Batteries Matter More Than Ever Under NEM 3.0 / Net Billing

Even if you lock in the 2025 tax credit, the economics of solar in California have changed dramatically.

California’s Net Billing Tariff (NEM 3.0) in a nutshell

California replaced its older, more generous net metering rules with the Net Billing Tariff (NBT), commonly called NEM 3.0. Under NBT:

• You still use your solar first to power your home.
• But extra power you export to the grid earns credits based on the utility’s avoided cost, which is often much lower than the retail rate you pay for electricity.

Analyses and case studies show that export compensation under NEM 3.0 has dropped by roughly 75% compared to the prior NEM 2.0 structure, stretching solar-only payback times into the 8–10 year range for many systems.

That’s why every smart installer in Southern California is saying the same thing:

Solar + battery is the new standard.

How batteries can restore strong savings

With a home battery, you can:

• Store your daytime solar and use it in the evening when TOU rates spike
• Export power strategically when export credits are highest
• Ride through outages, PSPS events, or wildfire-induced blackouts

Under California’s NBT, this can pull your payback time back toward the 7–8 year range for solar + storage—often better than solar alone.

California battery rebates (SGIP)

California’s Self-Generation Incentive Program (SGIP) offers rebates for battery storage. Depending on your utility and income or whether you’re in a high-fire-risk or frequently blackout-prone area, SGIP can cover 15% up to nearly 100% of installed battery cost for qualifying customers.

That means pairing your Qcells solar system with a battery can:

• Reduce your upfront cost
• Improve your NEM 3.0 economics
• Add backup power for outages
• Still qualify for the 25D federal tax credit on the battery if installed in 2025 and meeting the 3 kWh minimum capacity.

California-Specific Tax Perks: Property Tax Exclusion for Solar

One more Southern California advantage:

California has a property tax exclusion for active solar energy systems, meaning most qualifying residential solar systems do not trigger a property tax reassessment due solely to the solar installation.

Current guidance indicates:

• The exclusion applies to systems installed in a broad window of years (including current installations).
• It’s set to sunset around 2026–2027, but systems that qualify before the cutoff typically keep their exclusion until a future change in ownership.

So you can:

• Add solar + storage
• Cut your electric bill
• Potentially increase home value
• Without a big new property tax hit (under current rules)

Again: always confirm with your tax pro and county assessor for your exact property.

Why US Power Works Exclusively with Qcells (and Why That Matters to You)

The Qcells advantage: American-based manufacturing & supply chain

Qcells has invested more than $2.5 billion into building a major U.S. solar manufacturing presence, including expanded factories in Dalton and Cartersville, Georgia, forming what is often described as the first complete U.S. solar supply chain of its kind.

Key benefits for Southern California homeowners:

• American-assembled panels from Georgia facilities
• Large, stable production capacity aimed at serving U.S. homeowners
• Focus on low-carbon, high-quality modules, with recent recognition for low-carbon solar panel products assembled in Dalton.

Factory-direct partnership = better value and availability

US Power’s exclusive partnership with Qcells means:

• Factory-direct pricing instead of multiple middlemen
• Priority access to premium Qcells modules even in tight supply markets
• Systems designed specifically for Southern California roofs and climate
• Streamlined process from design → permitting → installation → SGIP + tax-credit guidance

When combined with a properly sized home battery, this gives you:

• Higher long-term reliability
• Stronger payback under NEM 3.0
• A system built around American manufacturing and energy security

Case Study: Southern California Homeowner Racing the 2025 Deadline

Let’s put this into a real-world scenario.

The situation:
A family in the San Fernando Valley signs a contract with US Power in mid-2025 for a Qcells solar + battery system. Their goals are to eliminate scary summer bills and lock in the federal tax credit before the deadline.

Timeline

• October 2025:
  Design approved; permits submitted.
• Early December 2025:
  US Power installs Qcells black-on-black panels and a 10–13 kWh battery (meeting the 3 kWh minimum). The system passes internal commissioning tests and is fully capable of operating, though it’s left off pending inspection.
• Mid-December 2025:
  AHJ completes final inspection and signs off. From a construction standpoint, the installation is complete and legally ready to operate.
• January 2026:
  SCE finishes the meter swap and issues PTO under the Solar Billing Plan (Net Billing Tariff).

Tax credit outcome (based on current IRS guidance)

• Because the installation was completed in 2025, the homeowner’s expenditures are treated as made in 2025, which is before the 25D termination date for new expenditures.
• The homeowner works with their CPA, documents the 2025 installation date (contracts, invoices, inspection sign-off), and claims the 30% Residential Clean Energy Credit on their 2025 tax return (filed in early 2026).
• PTO arriving in January 2026 does not, by itself, disqualify the credit, because the law focuses on the installation completion date, not utility paperwork.

That’s exactly the kind of timing strategy US Power helps homeowners plan for.

What You Should Do Now if You Want the 2025 Credit

If you’re in Southern California and still thinking about going solar, here’s a realistic checklist:

1. Start early enough for a 2025 installation completion

Because of permitting, supply chain, AHJ schedules, and utility interconnection queues, you don’t want to sign a contract in late December and hope for the best.

• Aim to have your contract signed and design approved months before year-end.
• Build in buffer time for backlogs with your city and utility.

US Power’s team can look at your city, utility, and roof and give you a realistic timeline.

2. Choose solar + battery, not solar-only

Under today’s NEM 3.0 / Net Billing environment, a solar-only system often leaves too much money on the table:

• Export credits are much lower than retail prices.
• Batteries let you time-shift your solar to high-rate evening periods and maximize the value of each kWh.
• Battery costs are partially offset by SGIP rebates and the federal tax credit (if installed in time and meeting capacity rules).

3. Keep excellent documentation

To make your CPA’s life easier (and yours):

• Save your signed contract
• Keep dated invoices and change orders
• Save installer completion documents and AHJ inspection approvals
• Make sure your installer can clearly show when installation was completed in 2025

If the IRS ever asks, you want to be able to show that your “original installation” was done by December 31, 2025.

4. Talk to a tax professional

Even though this blog is based on IRS code, guidance, and fact sheets, every situation has nuances:

• Mixed-use properties
• Rental vs. primary residence
• Partial business use
• Complicated payment schedules

A CPA or qualified tax advisor can apply the rules from Section 25D, the Residential Clean Energy Credit page, and the 2025 FAQ under OBBB to your exact facts.

Ready to Move? Book a 1:1 Solar & Tax-Credit Strategy Call with US Power

If you’re a Southern California homeowner and:

• Your roof is ready
• Your electric bills are painful
• And you’re worried about missing the 2025 federal solar deadline

…this is the moment to act.

US Power is:

• A local, homeowner-first solar & roofing specialist
• Working exclusively with Qcells for high-quality, American-assembled solar panels and integrated battery solutions
• Experienced with Southern California permitting, AHJs, utilities, and SGIP battery rebates

On your free consultation, we’ll:

• Review your roof, bill, and utility (SCE, LADWP, SDG&E, etc.)
• Estimate your solar + battery system size using Qcells technology
• Map out a realistic installation timeline to target completion in 2025
• Give you a simple, homeowner-friendly summary you can share with your tax professional

Book your consultation online today to protect your 2025 solar tax credit and design a system that actually works under NEM 3.0.

The longer you wait, the harder it becomes to beat the year-end crunch—and the more you’re leaving in your utility’s pocket instead of your own.