By Scott Kriner, Green Metal Consulting
Energy related incentives for homeowners and commercial building owners have been included in federal legislation since the Energy Policy Act of 2005. The good news is that the legislation over the past eleven years created excellent incentives for residential properties and commercial facilities to invest in cool metal roofing, energy efficient windows, insulation, and solar power. The bad news is that the incentives from legislation do not last forever. As certain bills were being passed to extend tax credits or other incentives, deadlines were often being established that made it difficult for anyone to keep up with the years in which the incentives were available. Extensions would be offered for one year, and in some cases for 8 years or more. It was difficult to stay on top of what incentives were still available and for how much longer, and what were the specifics.
The solar industry has relied on tax incentives to grow their industry. And the impact of financial incentives for solar installations has clearly helped to lower installation prices and to increase the number of rooftop solar installations and utility-scale deployment in solar farms. Incentives are designed to also continue the research into higher Photovoltaic energy efficiencies. All of this is good news for our country as the incentives not only lower prices but also create more jobs in the sustainable energy sector.
In December 2015, the Omnibus Appropriations Act created a multi-year extension of the residential and commercial incentives for solar installations through the end of 2023. The Investment Tax Credit (ITC) is now a 30% Federal tax credit for tax liability of residential and commercial and utility industries’ investment in eligible property which have started construction by the end of 2019.That incentive is lowered to 26% in 2020,and is lowered to 22% in 2021. The residential incentive will not be available after 2023. But after 2023 the commercial and utility incentive will drop to 10% permanently.
According to the Solar Energy Industries Association (SEIA) the Federal Treasury and IRS are developing guidance for solar developers who have solar projects placed in service before 2022. Despite that uncertainty SEIA praises the ITC extension for solar installations, stating “The recent ITC extension is expected to nearly quadruple solar deployment by the end of 2020 while doubling the US Solar employment levels and spurring $140 billion in economic activity.”
The solar industry is hopeful that these extensions for incentives will be the catalyst to set solar on a course of self-sustained affordability and growth for our nation’s energy portfolio.