The approval by the US Congress of a five-year extension to the solar Investment Tax Credit (ITC) is expected to be a boon for both residential solar installations and utility-scale solar farms, and could add another 140,000 solar jobs, as well as lead to $125 billion in new private sector investments.
The scheduled sunset of the current 30% ITC for renewable energy installations at the end of 2016 had many analysts predicting a drop in the rate of installed rooftop solar systems and utility-scale solar installations, as well as a hit to the bottom lines of solar manufacturers, distributors, and installers, but the approval of the ITC extension is expected to continue to spur growth in the solar industry.
After a contentious and controversial deal that includes a number of not-so-great energy stipulations, such as the lifting of the US oil export ban, the bipartisan approval of the omnibus appropriations bill (PDF) not only extended the period of time when solar installations can take advantage of the 30% ITC, but also re-upped the Production Tax Credit for wind energy, which expired at the end of 2014.
The approval of the solar ITC extension moved one industry analyst, Finlay Colville of Solar Intelligence, to proclaim that, “Beyond any shadow of doubt, the US solar market has just been given the most lucrative and government backed seal of approval yet seen in the PV industry.”
Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA), said that this approval “reestablished America as the global leader in clean energy,” and predicted an additional 140,000 jobs in the solar industry, adding to the current 200,000 solar jobs, as well as enabling “more than $125 billion in new, private sector investment in the U.S. economy.”
“Solar power in this nation will triple by 2022, hitting 95 gigawatts. That’s enough to power 19 million homes and represents 3.5 percent of U.S. electricity generation- up from 0.1 percent in 2010. And the extension will offset 100 million metric tons of CO2 annually- equivalent to the emissions from 26 coal fired power plants.” – Resch
According to Greentech Media, the extension of the solar ITC will keep the tax credit at its current 30% rate through the end of 2019, and then be reduced to 26% in 2020, 22% in 2021, and then drop down to 10% in 2022. Projects that are under development before 2024 will be able to still qualify for the tax credit, thanks to a ‘commence-construction’ clause.
“The ITC extension currently written into the omnibus spending bill will result in a 20-gigawatt annual solar market in the U.S. by 2020. At that rate, more solar will be installed each year than was added to the grid cumulatively through 2014.” – Shayle Kann, senior VP of GTM Research
The solar ITC extension and reinstatement of the wind PTC aren’t just a benefit to US citizens, but are also expected to help drive the global renewables industry. Industry analyst IHS predicts a reversal of the originally forecasted decline in global solar installations, saying that it is “a net positive for the global solar industry as a whole.”
While prior to the extension of the ITC IHS forecast a 10 percent decline in global installations, this forecast has now been reversed. Global solar installations are now expected to reach between 66 GW and 68 GW in 2016, growing to between 70 GW and 73 GW in 2017.
With the extension of the 30% solar ITC, home- and business owners can rest assured that their entry into clean solar electricity will continue to be an affordable and potentially profitable investment for years to come. In fact, this solar ITC extension news is so good that the solar developer Conergy put out a music video celebrating the energy of the sun as the “perfect source” for powering the world:
You’re the only thing I wanna use
You’re the cure to all my energy blues
Image: Aberdeen Proving Ground