The U.S. solar industry is preparing once again for the phase down of the 30% investment tax credit. This federal policy, implemented by the Bush Administration in 2006, is perhaps the most important piece of clean energy legislation currently in place. Congress wanted to give solar and wind a boost to compete with the subsidies of the fossil fuel industry.
Many companies are purchasing, or “safe harboring”, solar panels en masse as they aim to seize as much of the credit value as possible before the end of the year. At the same time, they are advocating for an extension of the credits; many feel a full extension would be the fair option to support the industry after tariffs were imposed on imported solar modules back in 2018.
Flashback to 2015, when Congress extended the credits another five years in a bi-partisan effort to boost the growth in solar industry while granting easier access to solar generation for consumers. This provided critical stability for businesses, investors, and of course future solar customers. Today, solar is looking for on-going support from Congress to make up for the shortcomings of renewable energy policy on the federal level.
Source: Solar Energies Industry Association
The structure of the tax credit is straight forward. If a business purchases a solar array at a cost of $100,000, they receive a $30,000 (30%) deduction from their taxes the following year. This credit can be rolled over to additional years should it be larger than the value of their taxes. The current phase down of the ITC is scheduled to drop 4% in 2020 and again in 2021, before remaining at 10% after 2022 for commercial and utility projects. Industry and market experts believe retaining the 30% credit will boost solar industry growth by nearly 30% by 2030.
The ITC was adopted in 2006 by President Bush. In the years since its creation, the price of solar has dropped 80%, while creating over 200,000 jobs and $140 billion in investment. On average, solar has grown 52% annually thanks to the existing ITC tax code. Still, solar only accounts for less than 3% of all electricity generation in the United States.
“An extension of the ITC would be a significant way to strengthen our industry’s prospects as solar power moves into a new decade” said Nathan Vogel, VP of Business Development with Inovateus. “From schools and homeowners to businesses and electric utilities, we’ve seen widespread support for an extension of the ITC. There is significant value and investment customers and the industry will lose if the ITC steps down.”
The Inovateus team and others from our network have been actively lobbying our members of Congress to extend the ITC. If you want to see solar energy continue to grow at a healthy pace in the U.S., you can add your name to those asking Congress to pass this bill through this link. Thanks for your support!
