When the Tax Credits End: A New Chapter Begins
What happens to the solar industry when the government incentives disappear? In this raw, unfiltered episode of The Solar Coaster, Alex Herrera—founder of Sun Energy Today and Adam Energy Finance—shares his brutally honest perspective on navigating solar’s most challenging market conditions.
From selling residential solar door-to-door in Arizona’s 120-degree heat to building multiple businesses and pivoting to commercial projects, Alex’s journey embodies resilience, adaptation, and the entrepreneurial spirit required to survive in an industry going through massive transformation.
The Arizona Crucible: Where Solar Dreams Are Tested
Alex’s solar journey began in one of the most demanding markets imaginable: Arizona, where temperatures regularly exceed 120 degrees and the solar industry has been through multiple boom-and-bust cycles.
“I was obviously living in Arizona, so we’re surrounded by nothing but sun twenty-four seven, right? Almost three hundred and sixty-five days,” Alex explained. “It first shined on me probably about twenty-seven years ago when it came on. I was doing another e-commerce business back in Tucson, and I met these young guys in the solar industry selling solar for some of the biggest companies at the time—Petersen, SunPower, and Ergs Energy.”
What struck Alex was their passion and success at such young ages. “I couldn’t believe these guys when I met them were in their early twenties, early to mid-twenties, and already multi-millionaires. I figured I was missing out, so I jumped on board.”
The Residential Reality: High Costs, Low Margins
Alex dove deep into residential solar, focusing initially on the economics that drove customer decisions. “We were very focused on residential. It was more focused on the credit details, seeing that we were able to become a finance company. So I was the financier, I am the installer, and I am the solar company.”
But he quickly learned that residential solar in Arizona came with unique challenges:
Expensive Electricity (But Not That Expensive)
Unlike Hawaii, where utility rates make solar economics obvious, Arizona’s rates hovered around $0.23-$0.27 per kWh—high enough to generate interest but requiring significant system costs to achieve meaningful savings.
The Utility Bill Reality
“At the end of the day, for your regular middle-class person, it’s hard to carry a five- or seven-hundred-dollar utility bill every single month,” Alex noted. This created a challenging dynamic—people wanted savings but struggled with the upfront economics.
Permit and Inspection Nightmares
“It was a lot more headache and a lot less money to be quite candid with you. And that was really unfortunate. It was a lot of opportunity, but versus dealing with just a small home towards a larger solar project.”
The Fraud Problem: An Industry Reckoning
Perhaps the most important part of our conversation addressed the elephant in the room: fraudulent solar companies that made billions while damaging the industry’s reputation.
“I think there were a lot of people that were claiming ITC and claiming that they had them and making money through their tax stores and things like that. There were just a lot of fraudulent things going on,” Alex revealed.
He specifically called out the impact: “People making money on a couldn’t have been making. And I believe that the administration is now kind of tightening that rope and is looking at the ITC more, trying to weed out those that were, that were there, so to speak.”
The SolarCity Effect
Alex referenced the original fraudsters—a story he wished was in my book. “When we think about the original fraudsters, it was right, right? SolarCity, right? I mean, that is kind of the original. That’s kind of the original. When we think about, you know, how did they build such a low rate? And it was because of that fraud, right?”
The impact? Billions were made through questionable practices, setting unrealistic expectations and creating a race to the bottom that hurt legitimate operators.
The ITC Sunset: Survival of the Fittest
With the Investment Tax Credit stepping down or potentially ending, Alex sees this as a necessary market correction.
“I think what’s happening here is that I think what’s happening in 2025, I think the administration is restructuring the ITC. I think they’re weeding out all the people that need to be weeded out, and only the strong are going to survive. Those that are doing things properly, like our company, we’re doing it correctly. You know what we have, and we’re doing things correctly, so we have nothing to fear.”
His perspective: “Once everything weeds out, I think they’re going to turn it back on because there’s just too much money to lose out there. It’s just too much. It’s too much. And there’s just not; here’s just not the power to be able to run it.”
The Timeline
“I think the ITC is going to be gone down to the belt to say, ‘Oh, it’s going to go away by, you know, the end of twenty, twenty-six or twenty twenty-seven.’ You know, as far as ITCs go, you got to get projects in.”
Commercial Solar: A Different Beast
Alex’s pivot to commercial solar revealed dramatically different economics and challenges.
The Utility Indifference
“If you’re not building at least ten megawatts, utility companies aren’t interested. Yeah, I bet. Yeah. They’re just not. They’re not. They’ve got no money. They’ve got all the money in the world to see who’s really committed.”
The Financing Gap
“Nowadays, you do have to show that you have the project. Number one, you have land acquisition. Number two and number three are that you have the sixty percent money already solidified, even if it’s in an LOI format. You don’t have to show that you have it.”
This 60% equity requirement creates a massive barrier to entry for smaller players.
The Opportunity Zones
Alex highlighted innovative financing approaches, including opportunity zones and EB-5 programs, that can provide alternative funding pathways for large-scale projects.
The Grandfather Clause Trap
One of the most insidious issues Alex discussed was how utilities are restructuring rates to effectively eliminate savings for existing solar customers.
“You’re there in Arizona, like, you know, every single year when October and November, September and October, you know, APS and, uh, the APS submitting their, uh, grandfather down right there.”
The result? Year after year, the grandfather clause gets whittled down, and customers who were promised long-term savings find their economics evaporating.
“It continues to go down and and and TEP. I don’t even think they even have any more credit. Do they have any more buyback there? Uh, I don’t even think they do. Yeah, I don’t think I think it’s, um, on the residential side, more buyback.”
Working with Family Offices and Alternative Capital
Alex’s current focus involves sophisticated financing structures that most residential solar professionals never encounter.
The Family Office Opportunity
“We co-mingled with some family offices. Um, basically it’s law firms, um, that, uh, that are well off in different states.”
These relationships provide access to capital for larger projects but require sophisticated deal structures and significant due diligence.
The EB-5 Program
Alex is actively exploring EB-5 immigrant investor programs for clean energy projects: “There’s, uh, I think, uh, back a couple of years ago, it was, uh, at one hundred thousand dollars per head. Now it’s at a million dollars per head.”
This program allows foreign investors to obtain residency while funding U.S. clean energy projects—creating a unique capital source for large-scale developments.
Key Takeaways from Alex’s Journey
1. The market correction is necessary. Fraudulent operators needed to be weeded out. The strong will survive.
2. Residential and commercial are completely different games. The skills, financing, and economics don’t transfer easily.
3. The ITC may return. Alex believes that once the fraudsters disappear, economic necessity will reintroduce incentives.
4. Alternative financing is the future. EB-5, opportunity zones, and family offices provide pathways beyond traditional solar financing.
5. Utility economics are working against solar. Grandfather clauses are being eroded, and rate structures are changing to minimize solar savings.
6. Scale matters in commercial. Unless you’re building 10+ megawatts, utilities aren’t interested.
7. Equity requirements are brutal. 60% equity is needed to even get financing consideration, which creates massive barriers.
Why This Episode Matters
Alex Herrera doesn’t sugarcoat the challenges facing solar entrepreneurs today. His perspective—earned through years of grinding in residential markets and now navigating commercial complexities—provides invaluable insights for anyone trying to build a sustainable solar business.
Whether you’re a residential installer wondering if you should pivot, a developer exploring commercial opportunities, or an investor trying to understand solar’s risk-reward profile post-ITC, Alex’s candid assessment of market realities and emerging opportunities offers a roadmap for the road ahead.
The solar industry is going through a shakeout. The question isn’t whether you’ll be affected—it’s whether you’ll be one of the survivors who emerges stronger on the other side.
Listen to the Full Episode
Ready to hear Alex’s unfiltered perspective? Listen to this episode of The Solar Coaster on your favorite podcast platform:
Connect with Alex Herrera
Learn more about Alex’s businesses:
- Website: ac.company
- LinkedIn: Alex Herrera
- Sun Energy Today: sunenergytoday.com
- Adam Energy Finance: adamenergyfinance.com
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