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ITC extension removed from House spending package, facing year-end step-down

By Billy Ludt | December 17, 2019

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The solar Investment Tax Credit (ITC) is still set to start stepping down at the end of 2019. An extension to the subsidy was removed from the annual House spending package, a $1.4 trillion piece of legislation, on December 16, but did include the wind production tax credit. The legislation also did not loop energy storage technologies into the ITC.

“The recently announced extenders agreement is a squandered opportunity,” said Gregory Wetstone, president and CEO of the American Council on Renewable Energy. “While ACORE supports the modest extensions in the package, they will do little for renewable growth and next to nothing to address climate change. Given bipartisan support for tax incentives for energy storage, offshore wind, electric vehicles and other critical clean energy priorities, this outcome is deeply disappointing. This is not the time to be kicking the climate can down the road. If we’re going to have any chance at reducing greenhouse gas emissions to the level that scientists say is necessary, we need smart policies to accelerate the ongoing transition to a renewable energy economy and a modernized, 21st-century grid.”

The ITC is a federal tax subsidy that, in its current capacity, gives solar system owners a 30% return on a solar project’s total tax liability in any market segment. In 2020 the ITC begins phasing out, dropping to 26%, 22% in 2021 and it will decrease indefinitely to 10% for commercial and utility solar projects, and zero for residential. A five-year extension to the renewables subsidy was included in the House Ways and Means Committee’s recently drafted tax package, Growing Renewable Energy and Efficiency Now (GREEN) Act of 2019, but no action has been taken on that legislation.

“Congress let a crucial opportunity slip by, advancing a massive government spending bill without extending one of the most successful clean energy tax policies in history, the solar Investment Tax Credit,” said Abigail Ross Hopper, president and CEO of SEIA. “While I’m disappointed by this missed opportunity to boost the U.S. economy and jobs, and tackle climate change, I’m heartened that voter support for clean energy policies is at an all-time high. The solar ITC is a proven way to generate tens of billions of dollars in private investment each year, while substantially reducing carbon emissions. We will look for opportunities next year to again engage our incredibly supportive solar community and work with Congress on clean energy policies that work for all Americans.

“We knew this advocacy campaign was going to be an uphill climb,” she continued. “I’m proud of the progress we’ve made and I’m grateful for our bipartisan supporters. We were pleased by the sheer number of co-sponsors we gained, including the 14 House Republicans. This support will be critical as we continue our fight for meaningful policy, including provisions for clean energy storage in 2020.”

About The Author

Billy Ludt

Billy Ludt is associate editor of Solar Power World.

Comments

  1. Rick Murray says

    May 12, 2020 at 2:12 pm

    Does anyone have the yea and nay list for how each member in congress voted. I would like to know if my congresswoman (Virginia Foxx) voted to “extend” or “end” the Solar ITC.

    Reply
  2. Thomas Caruthers says

    January 9, 2020 at 8:07 pm

    I think the oil and gas lobby is a formidable opponent (if not a 900-lb. gorilla), and will be difficult to overcome.

    On the other hand, solar needs more attractive financing options; not these “slight-of-hand” schemes where dealers are forced to buy-down interest rates, which inflate the cost of the technology. FHA has a program where solar can be added to a home loan, purchase or refinance; the terms of the loan allow for a more affordable cost. Let’s be honest; extended pay-back periods are a tough sale; if solar paid for itself from “Day-1”, it would be a far easier sale. We can only get that through more attractive financing programs.

    Reply
  3. Vincent Campione says

    December 22, 2019 at 8:24 am

    What is the next step for ITC?

    Reply
    • Kelly Pickerel says

      December 23, 2019 at 8:20 am

      The tax credit drops to 26% beginning Jan. 1, 2020.

      Reply

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