Congress is currently considering a five-year extension to the solar Investment Tax Credit (ITC) incentive which has already boosted the momentum of solar installations by homeowners, industries and utilities providers in the US. According to analysts, an extension of the investment tax credit would boost solar energy generation in the US by 25 gigawatts over the period leading up to 2020, stimulating investment in solar installations by a further $40 billion. Utility Companies expected to invest heavily if the bill is approved Utility scale solar energy plants will be the biggest investors should the proposal for extension of Investment Tax Credit be extended. Solar energy generating plants are expected to increase by as much a 73% by 2020. By focusing on low-cost, renewable energies such as solar power, utilities companies will likely be signing solar contracts at a cost of less than four cents per kilowatt hour produced, and this impact is expected to come into effect during the next two years. Growth in residential and commercial installations will continue to be rapid But industrial and residential installations are also expected to gain momentum. Thanks to the Investment Tax Credit System, solar power installations by homeowners are likely to grow by 35% as private citizens cash in on the tax incentive and begin generating their own electricity to take advantage of utility bill savings. Commercial solar installations will see even greater growth, with the expected expansion of solar energy predicted to reach the 51% level. Total overall growth Taken together, the increased investments in solar energy over the utility sector, commercial operations and residential homes is expected to result in an overall increase in solar energy generation that will amount to a 54% increase in soar energy production by 2020. How will the extension of investment tax credits work? Currently, the ITC offers a tax incentive of 30% of the cost of a solar installation. Should the ITC be reduced to a 10% incentive for non-residential solar installations only, none of these benefits will be realized. If the omnibus spending bill currently on the table is passed as is, the 30% Investment Tax Credit will remain in place until the end of 2019. Thereafter, the incentive will be reduced incrementally, dropping to 26% in 2020, 22% in 2021, and falling to 10% for non-residential applications thereafter. However, an additional clause allows for projects that commence construction prior to the reductions, but only come online after the reductions to still benefit from the higher percentage tax credit system provided they are in operation by the end of 2023. Why does Congress need to debate the bill? Investment tax credits represent a form of spending for any government. Whereas the full investment in solar power would otherwise be taxable, the government is currently ‘letting us off the hook’ to the tune of 30% of the cost of our solar installations – no matter how big or how small they are. That’s a big incentive for everyone concerned. When combined with the electricity cost savings (or electricity generation cost savings, from the perspective of utility companies), the investment tax credits offered allow those who install solar energy systems to recover their costs a whole lot more quickly. As we know, the US government is eager to reduce emissions by encouraging the change to clean, renewable energy sources, so the bill is in line with government policy. However, the cost implications from government’s perspective have to be taken into account –and so will certain trade-offs – that’s where the congress debate will be cantered. Will the bill be passed? According to political analysts, there is an excellent chance for the new omnibus spending bill to be passed. Republican want the oil export ban to be lifted, and Democrats want to get something in return – namely the extension of investment tax credits. It would therefore seem that there is plenty of support for the bill from the political players who will shortly be voting on the issue – but there are those who strongly oppose the lifting of the oil export ban. The speaker of the house says that he would prefer not to predict the outcome ahead of time. Is it time you went solar? Let us create a free, fully customized proposal for you. Within our proposal, we will provide you all of the information you need to make an informed decision! Call us at 1855-60-1SOLAR (601-7652) or visit our site at www.1SolarSolution.com
