It’s looking like blue skies for the solar industry, as Congress will vote on an omnibus spending bill later this week that includes a five-year extension of the solar ITC.
It appears the sun will not set on the solar investment tax credit (ITC), ensuring continued growth for the U.S. solar industry well into the future. An extension the credit—the main driver of solar growth in the United States—was unexpectedly included in a $1.1 trillion omnibus spending bill agreed upon in Washington, D.C., late Tuesday night. It will be finalized and voted on later this week.
“By extending the solar investment tax credit for five years with a commence construction provision and a gradual ramp down, bipartisan members in both Houses have reestablished America as the global leader in clean energy, which will boost our economy and create thousands of jobs across America,” Rhone Resch, president and CEO of SEIA, said in a news release today.
The U.S. solar industry employees 200,000 people, and the extension is likely to add another 140,000 jobs or more, Resch said. The extension will also let the solar industry achieve its pledge of employing 50,000 veterans by 2020.
According to research firm IHS, key details of the extension include:
- The ITC will be extended from Dec. 31, 2016, and instead stepped down from 30% to 10% until 2024. Projects that start construction by 2019 will receive the current 30% ITC, while projects that begin construction in 2020 and 2021 will receive 26% and 22%, respectively. All projects must be completed by 2024 to obtain these elevated ITC rates.
- For residential photovoltaic (PV) systems, a similar tax credit phase-out applies until December 31, 2021, after which the tax credit scheme ends.
A procedural glitch will move a vote on the spending bill and tax extenders package to Thursday. Giving the impression of a narrow victory for the solar industry, the text of the tax incentive extension can be found at the tail end of the omnibus spending bill text, on page 2005 of 2009, available here.
The proposed extension of the ITC will come as a major relief to the U.S. solar industry. Analysis by Bloomberg New Energy Finance showed the expiration of the ITC could have caused a 71% decline in U.S. solar installations between 2016 and 2017, leading to the loss of more than 100,000 jobs nationwide.
A five-year extension of the ITC will lead to more than $125 billion in new, private sector investment in the U.S. economy, according to SEIA. And much of this growth will come from small businesses, which make up more than 85% of America’s 8,000 solar companies.
Resch broke the news on Twitter:
Historic extensions of the ITC in omnibus https://t.co/hivqJTVjuG – 2017, 18, 19 at 30% 2020 at 26% 2021 at 22% plus commence con @SEIA
— Rhone Resch (@RhoneResch) December 16, 2015
SEIA has lead the fight for the ITC extension, promoting the incentive at every opportunity for more than a year. Earlier this month the trade association invited 14 solar CEOs to meet with members of the House and Senate from both parties to plead the case of an extension of the ITC.
“Since the ITC was passed in 2006, U.S. solar growth has exploded and more than 150,000 American solar jobs have been created,” Rhone Resch said in a September news release. “By any measurement, that’s a success for both our economy and environment.”
As for how we at Solar Power World feel about the proposed ITC extension:
Great day!! Major extension of solar in omnibus. Pg 2005 – https://t.co/HISLSL81eb @SEIA #SolarITC via @rhoneresch
— Kathie Zipp (@SolarKathieZ) December 16, 2015
— Kelly Pickerel (@SolarKellyP) December 16, 2015
