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Extension Of U.S. Wind And Solar Tax Credit Applauded

ITC - solar power

The recently passed extension of an  investment tax credit (ITC) will bring further massive growth to the USA’s wind energy and solar power capacity; plus generate more than a hundred thousand new jobs.

The ITC is a 30 percent credit for wind, solar power and energy storage systems installed at eligible residential and commercial properties. It has underpinned much of solar’s growth in the USA – 1,600 percent since it was implemented in 2006.

The ITC was due to expire in its current form at the end of next year. From January 1, 2017, the tax credit was expected to drop to 10% for commercial solar projects and disappear entirely for home solar power systems.

The uncertain future of the ITC past 2016 was already impacting investment; particularly given that as recently as a few weeks ago; an extension seemed unlikely. Aside from its local impacts, its demise would have also been much more than a blip on the global market – solar capacity installation was forecast to decline by 10% globally after the ITC expired.

But extended it was – the ITC will stay at 30% through 2020.

“A five-year extension of the ITC will lead to more than $125 billion in new, private sector investment in the U.S. economy,” says the Solar Energy Industry Association (SEIA) “And much of this growth will come from small businesses, which make up more than 85 percent of America’s 8,000 solar companies.”

With the extension in place, the USA’s solar capacity is forecast to triple by 2022; reaching 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,” the organisation states.

The USA’s solar industry is also a major employer. According to the SEIA, the sector is currently responsible for 200,000 jobs and the extension is likely to add another 140,000 jobs or more.

SunEdison Inc.’s (NYSE: SUNE) President and Chief Executive Officer, Ahmad Chatila, welcomed the passing of the extension, which occurred on Friday.

“The passage of tax credits for wind, solar and energy storage is a great step forward for America. The PATH Act of 2015 is the foundation of a predictable renewable energy policy which will create jobs, provide Americans with cost-effective electricity, and keep us on a path to clean and sustainable energy,” said Mr. Chatila.

“We applaud Congress for this bipartisan deal which benefits not only the people of America, but also thousands of small and medium size businesses across the country.”

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