By: Eric Wesoff
February 2, 2015
President Obama just unveiled a $3.99 trillion budget for 2016 that asks Congress for a permanent extension of tax credits for the solar and wind industry.
The current policy, which includes an expiration of tax credits in 2017, is encouraging a boom in solar installations this year and next. But 2017 will see a collapse in utility solar — along with some retrenchment and uncertainty in commercial and residential solar markets.
In a section titled “Improving Incentives for Research and Clean Energy,” the 2016 budget proposal includes a request for $7.4 billion for clean energy technologies, along with a shopping list of funding and incentives for the renewable sector and nuclear power industries.
Although the Republican-controlled Senate and House will not approve this budget or enact permanent extensions of the tax credits, the proposal signals that the administration will support some preservation of the solar Investment Tax Credit (ITC) and the wind power Production Tax Credit (PTC). The ITC, a tax credit of 30 percent of the cost of solar installations, is slated to step down to 10 percent at the end of 2016.
The rhetoric and scale of these requests set a negotiating stance for the administration for when the actual budget sausage gets made. A potential compromise might see projects started before the end of 2016 get “grandfathered in,” or result in a more gradual stepdown of the ITC. The PTC negotiations will be part of a larger tax extenders bill coming up later this year. The ITC is expected to remain intact into 2016 when it would come up as part of a tax-reform effort. For full article…