Prune the Weeds, Feed the Roots

Why Onsite Energy Is About to Have Its Best Decade Yet

For years, a community orchard thrived on free fertilizer vouchers each spring, and truckloads of nitrogen-rich pellets were delivered. Yields rose, but so did the weeds, pests, and runoff that choked nearby streams. When the subsidy suddenly vanished, the community panicked, convinced the orchard would wither. Yet one farmer pruned the tangled branches, composted fallen fruit, and installed drip lines that delivered nutrients only where roots could drink. Her trees produced sweeter harvests at a fraction of the cost, and before long, neighbors were copying her playbook.

Our energy market now stands at the same crossroads. The vouchers that have benefited the market will eventually expire. Like the orchard, the clean energy sector will flourish once we cut the bloat and initiate more efficient, intelligent practices at scale.

Big Beautiful Bill Blues? Why Onsite Energy’s About to Have Its Best Decade Yet

Washington’s “One Big Beautiful Bill” is sucking up all the oxygen and optimism across our industry. But the real story is less apocalyptic. There is an opportunity to accelerate the deployment of onsite energy systems in a way that is quick, cheap, agile, and built explicitly around business objectives.

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Big Beautiful Bill: The Fast Facts

• Where it sits: House-passed a $3.8 T reconciliation package; Senate edits are underway with a July 4 target deadline, which will likely not happen.

• What it does: Kills most Inflation Reduction Act clean energy credits.

• Who’s nervous: The whole industry, but I would suggest that it is the utility-scale wind, solar, battery, hydrogen, and nuclear developers that will be most impacted.

• Who’s lobbying: Political leaders do not prioritize energy tax credits over other aspects of the Bill. That said, last week, despite supporting the House bill, 13 House Republicans wrote a letter to Senate Majority Leader John Thune asking him to address their concerns about provisions that undermine clean energy development, including the timeline, restrictions on foreign ownership and limits on "transferability" of tax credits that enabled developers to sell their tax credits and use the funds to finance project construction. They want to avoid “projects turning to pumpkins at midnight.”

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Incentives ≠ Value: Soft Costs Are the Real Margin Monster

• Soft costs are 59% of residential LCOE, 55% of commercial and 38% of utility-scale. energy.gov

• They include data, models, planning, design, permitting, interconnection, sales, procurement, legal, stacked developer fees, and more. Bloat sometimes survives only because a tax credit can cover it up.

• Hardware tells a different story:

  • PV system costs have gone down ≈ 82 % since 2010.

  • Li-ion battery pack prices down ≈ 89 % (2010 → 2024).

• Project cots have not come down proportionally to these incredible reductions in hardware costs, so what’s going on?

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Where the Subsidy Dollar Actually Lands

When we break it down, where do the subsidies end up? Does the customer end up with benefits? Yes, each customer gets a proportion of the benefits, but certainly not all of them, which often become absorbed in the project development processes.

Project development soft costs are real. According to Wood Mackenzie deal data, implied developer fees run $0.20 – $0.60 per watt, 18% to 31% of total project CAPEX, and we know some developers pursue more.

Even after tariffs, Chinese-owned supply chains still capture most hardware spend: roughly 80% of U.S. module imports arrive from Southeast Asian factories controlled by Chinese firms, and they’re racing to add another 20 GW of U.S. capacity to keep that flow alive. The typical factory never sees margins above 20% and in cases a lot less.

The bigger “fat” sits in the layers after the container lands, developer mark-ups, distributor spreads, dealer fees, and project planning soft-cost structures that exceed 50 % of the total installed price.

The margins for project development can stay sticky because the 30+% ITC can insulate them: take away the credit, and every excess dollar of soft cost comes straight off the project’s IRR, threatening its viability.

Cutting the credits should force a reckoning on both fronts: cheaper modules already exist, but project development economics must also slim down.

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Utility-Scale Will Feel the Pain & Onsite Will Feel the Tailwind

Credits being cancelled or wound down more quickly will cause utility-scale projects more pain for the following reasons.

While the administration favors traditional energy sources, each faces significant challenges: coal remains economically unviable, natural gas is limited by equipment shortages and price volatility, and nuclear power, despite recent policy support, won't be ready for at least 5-10 years. Meanwhile, utility-scale renewable and storage projects face uncertainty as government incentives are reduced or eliminated.

These constraints in the broader energy market will likely worsen grid problems like high costs, power outages, and reliability issues. As these pain points intensify, businesses and consumers will find onsite energy systems increasingly attractive as a solution. The current energy landscape is creating more substantial incentives for onsite energy systems.

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Necessity Breeds Efficiency

The orchard that prunes early not only survives the loss of fertilizer but also discovers that sunlight and smart irrigation are all it needs to bear sweeter, cheaper fruit.

The macro trends are inevitable:

• Demand keeps rising

• Energy access, reliability and security risk grow

• Subsidy uncertainty spikes capital cost

Every headline about “repeal” pushes financiers toward projects that pencil without credits, i.e., those with the leanest soft-cost stack.

I am loving seeing the progress being made on this front, a few examples:

• SB 1202 (Texas) aims to slash permit wait times to less than 15 days with engineer self-certification, which is exactly the kind of red-tape rollback that substitutes for lost tax equity.

• States from California to New Jersey are piloting SolarAPP+ instant approvals. This aims to cut general processing times from 47.5 days to 30 days. NREL found that this created -31 % schedule efficiencies and 15,000 staff-hours saved in 2023.

• Tech-enabled solutions to automate much of the energy stack are becoming increasingly critical. Check out some recent examples of these amazing companies bringing efficiency to our industry in this showcase.

I live for this opportunity. We created VECKTA to tackle the soft cost equation. The business pain points are fundamental, the opportunities are boundless, and the equipment, installation capabilities, and capital are abundant.

We need to streamline our industry's strategy, planning, system design, procurement, legal, and permitting aspects to originate more great projects. More great projects result in wins for our economy, businesses, grid, and society. There is no getting away from energy being the lifeblood of everything: unless we have access to abundant, affordable and reliable power, we can not thrive (and we certainly cannot compete on a global scale, win the AI race, ensure our security, and deliver on the expectations of our citizens).

At VECKTA, we are seeing the opportunity firsthand, and with our marketplace and procurement workflows creating a competitive environment, we are cutting project capital costs by up to 40% today and planning costs by 90%, and there is more to come. Example project economics below:

“Despite D.C. turbulence, distributed energy is entering a very good time.” —Tim Hade, Energy Changemakers podcasts.apple.com

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Key Takeaway

While I will advocate for reducing the tax credits to ensure the industry has time to adapt, if they do go away, it is not the end—it is just the beginning!

Tax credits may fade, but the drivers of onsite energy, cost avoidance, resilience, sustainability, control, data transparency, speed, and scalability are only getting stronger. Less artificial boosts in the system force everyone to cut soft costs, and that is how we unlock a wave of profitable, customer-centric projects that compete on merit. We need to focus on:

1. Destroy the Bloat. Every dollar not tied to hardware or performance is fair game.

2. Automate the Heavy Lifting. Code beats billable hours; data beats decks.

3. Streamline or Whither. Permitting under 15 days is the new bar.

4. Put Customers First. Design to solve the customer’s P&L pain, not to maximize margin.

5. Local > Remote. Build where the electrons are used, at our facilities; transmission lines and central power plants hundreds of miles away are last century’s solution.

6. Share the Upside. Suppliers earn volume, hosts earn savings, grids earn flexibility.

7. Iterate Relentlessly. Lower Costs → more good projects → more data → smarter algorithms → cheaper next project. Everyone wins, and all boats rise.

8. Own the Narrative. If we don’t tell the story, someone else will, probably with doom-scroll vibes.

These stats underscore the orchard metaphor, the “fertilizer voucher” (tax incentives) hasn’t just fattened the fruit, it’s fed a jungle of weeds. When incentives disappear, the hardware is already cheap; the soft-cost overgrowth must be pruned. Showing the yawning gap between commodity cost curves and installed behind-the-meter pricing makes the case that:

1. Ending subsidies exposes, rather than kills, projects.

2. Efficiency gains now live in process, not technology.

3. Onsite energy can boom once those soft-cost weeds are cleared.

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Your turn

If the ITC vanished tomorrow, how much could you slash your project soft costs?

Post a comment, or better yet, share a success story in the comments. Let’s continue to crowd-source the playbook for an incentive-light, efficiency-rich future.

To end with a bit of humor, I enjoyed this comic about the Irish Grid. However, it is a real reminder of what happens if we do not co-create a thriving energy future together.