On Friday, December 18th, Congress officially extended the renewable energy tax credit that has helped push solar energy into the mainstream as a viable energy option over the last several years. The Investment Tax Credit (ITC) offers residential and commercial solar system owners a 30% tax incentive on the total cost of installation, including materials and labor, and was set to expire at the end of 2016 (if you have a large tax liability, solar becomes even more attractive, not to mention the offset in electricity bills from a utility). The new bill extends the incentive over the next five years, and includes a commence construction clause.
The pending expiration of the ITC has caused much uncertainty in the industry and has been felt throughout the supply chain, including for material distributors like North Coast Electric. This speculation has led to material shortages, permitting issues, and anxiety in the community. While having a sense of urgency around the impending expiration of the ITC has helped sell material in the short term, it also creates confusion, panic, and a hesitation to enter into the renewable installation and investment markets. Currently, fossil fuel subsidies account for billions of dollars in aid each year – solar has fought for the ability to compete on a level playing field with these sources of energy, and the extension of this credit will help us to do so. Additionally, the cost of solar materials has dropped more than 50% over the last five years, so each year solar energy gets closer to *grid parity.
Below is a statement from Rhone Resch, President and CEO of Solar Energy Industries Association regarding the ITC extension and what it means to those employed in the solar industry:
“Thanks to the ITC, solar energy will add 220,000 new jobs by 2020, and with this extension, the solar industry can achieve its pledge of employing 50,000 veterans. Clean solar energy will cut emissions by 100 million metric tons and replace dozens of dirty power plants. Importantly, in the follow up to the Paris accord, this establishes the United States as a model for the reduction of greenhouse gases.
“A five-year extension of the ITC will lead to more than $133 billion in new, private sector investment in the U.S. economy by 2020. And much of this growth will come from small businesses, which make up more than 85 percent of America’s 8,000 solar companies.
“Solar power in this nation will more than triple by 2020, hitting 100 gigawatts. That’s enough to power 20 million homes and represents 3.5 percent of U.S. electricity generation.”
We look forward to continuing to offer solar solutions to our customers, and our solar division welcomes any questions you may have. Let’s celebrate this momentous news!
*Grid parity occurs when an alternative energy source can generate power at a levelized cost of electricity (LCOE) that is less than or equal to the price of purchasing power from the electricity grid. Source: https://en.wikipedia.org/wiki/Grid_parity
Written By: Kendra Hubbard, Solar Quotations Specialist for North Coast Electric