On Friday, December 18, 2015, right before lawmakers adjourned for the holidays, Congress passed a spending bill making the solar Investment Tax Credit (ITC) available for several more years and extending the Production Tax Credit (PTC) for wind power and other renewable energy technologies. President Obama has voiced support of the extensions and is expected to sign the bill into law.
The solar Investment Tax Credit, which was scheduled to step down to 10% on January 1, 2017 and expire entirely for individuals, was extended for as many as eight years as part of a $1.15 trillion spending bill. The solar tax credit for utility-scale and commercial solar projects was extended until 2024 with a gradual phase out starting in 2020. The solar tax credit for residential rooftop solar will stay at 30% for three more years, and then decline incrementally through 2021, and remain at 10 percent permanently beginning in 2022. The bill also allows for solar PV projects to claim the solar tax credit for the year in which they begin construction.
“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,” said Solar Energy Industries Association president and CEO Rhone Resch.
The 2.3-cent wind PTC will also be extended through 2016. Projects beginning construction in 2017 will see a 20 percent reduction in the incentive, and the PTC will continue to fall 20 percent each year through 2020.
Geothermal, landfill gas, marine energy, and incremental hydro will all receive a one-year PTC extension and, if developers choose, the technologies will also qualify for a 30 percent ITC. The bill expanded grants for energy and water efficiency as well.
In exchange for the tax credit extensions that Democrats wanted, Republicans got what they hoped for with an end to a 40-year ban on the export of crude oil.
“While lifting the oil export ban remains atrocious policy, the wind and solar tax credits in the Omnibus will eliminate around 10 times more carbon pollution than the exports of oil will add,” Pelosi wrote in a letter to lawmakers.
According to GTM Research, the solar ITC extension will help the U.S. have a 20-GW annual solar market and propel nearly 100 cumulative gigawatts of solar installations by 2020, resulting in $130 billion of total investment. That’s enough to power at least 19 million homes and represents 3.5 percent of U.S. electricity generation, which is up from 0.1 percent in 2010.
Green Tech Media