January 13, 2015
The Federal Investment Tax Credit is arguably America’s most important solar policy. This 30 percent tax credit spurred 1,600 percent annual growth since its implementation in 2007 and turned solar into an economic engine.
But the ITC is only authorized at 30 percent through 2016 before falling to 10 percent thereafter (for non-residential systems), and federal gridlock leaves its extension in doubt. America’s wind industry has suffered boom-and-bust cycles from Production Tax Credit reauthorization uncertainty, leaving analysts to ask if solar will suffer the same fate.
So here’s a proposal: let’s prevent a tumultuous future by reducing the ITC to 10 percent in 2017 and letting it expire in 2018. It may seem odd for a solar CEO to call for such a move, but we won’t need the ITC if we’re given a smooth glide path to prepare as an industry.
Consider a scenario after the 2016 elections, in which a lame-duck White House and the U.S. Senate fully extend the ITC for six months, providing continuity for solar developers while allowing the new government to take shape. Then, the ITC is lowered to 10 percent at the end of 2017, scheduled to end on December 31, 2018, and all projects started by the end of each calendar year qualify for that year’s full credit. Click for full article.