Rhone Resch: Why it’s just the beginning of America’s solar boom

By Rhone Resch, President and CEO, Solar Energy Industries Association

As we begin the New Year, 2015 will be remembered as a banner year for solar energy. We expect the final tally to show that new solar installations reached a record-breaking 7.4 GW in 2015. And yet, that record is already looking like a distant memory, compared with what is to come.

When you factor in all of the historic renewable energy events of 2015—extension of the solar investment tax credit (ITC), the global climate action accord struck in Paris and the finalization of the Clean Power Plan—there is tremendous momentum for transforming America’s power grid into one that is driven by 21st century technologies. And solar is leading the way.

Solar will quadruple in size to nearly 100 GW of total capacity by the end of 2020 from just more than 24 GW today. At that point, there will be enough solar installed to power 20 million American homes. There is no doubt that the enactment of a five-year ITC extension has put America’s solar developers on this strong growth path. When President Obama signed the bipartisan legislation, the solar industry stepped to the forefront of the conversation about clean American energy.

By 2021, solar generation will offset more than 100 million metric tons of carbon dioxide a year— equivalent to the annual emissions of 27 coal power plants.

Here’s how the ITC will work. It involves a long-term extension for both residential and commercial solar users with a gradual phase down through 2021, as well as a permanent 10% tax credit for commercial users.

ITC Extension and Phase Down Schedule

• 2017—30% tax credit
• 2018—30%
• 2019—30%
• 2020—26%
• 2021—22%
• 2022 and beyond—permanent 10% for commercial credit

For the first time, the extension also allows for users to claim the credit as soon as construction of their projects begin, as long as the projects are placed in service by Dec. 31, 2023.

Upon passage of the ITC, it was hard not to notice its relationship to the broader commitment in Paris by nearly 200 world leaders to reduce greenhouse gas emissions. I think it says a lot that U.S. policymakers returned from Paris and helped push a major pro-climate policy forward, as a first step in what will need to be a long-term commitment to clean energy.

Solar is an abundant source of energy and the extension of this policy will ensure that it remains competitive while technological advances move it closer to grid parity. And the timing couldn’t work out better. Extension of the ITC sets up a nice gliding path into the time at which power producers are going to need to start meeting requirements of the Clean Power Plan. At that point, solar will be producing 3.5% of America’s electricity with the potential to reach double digits from there.

With the historic growth we are seeing right now in the industry and the promise of continued momentum, solar will make our nation proud and prosperous as a world leader in a new clean energy paradigm. This is just the beginning of the solar era.