Legislation Introduced to Extend Vital Solar Tax Credit

Legislation has been introduced in the House to extend federal solar incentives through 2021.

The Investment Tax Credit (ITC) provides a 30% tax credit for homeowners and businesses that install solar systems. At the end of 2016 it drops to zero for residential installations and to  10% for commercial systems.  

The "New Energy for America Act" is sponsored by Representative Mike Thompson (D-CA). The 5-year extension is the time needed for the solar industry to reach grid parity in most US electricity markets.

Rep Thomson

"The ITC is one of the most important tools we have that supports deployment of solar energy in the United States," says Thompson. "Since 2006, when the residential and commercial ITCs first took effect, employment in the US solar industry has grown to 175,000 jobs at more than 8,000 solar companies. It has a proven track record of success and it’s important that we extend it."

Original co-sponsors are all Democrats:

California: Tony Cardenas; Scott Peters; Doris Matsui; Ted Lieu; Linda Sanchez; Jared Huffman; Raul Ruiz
Oregon: Earl Blumenauer
Washington State: Jim McDermott
New Mexico: Ben Ray Lujan
Minnesota: Keith Ellison
Tennessee: Steve Cohen
Maryland: Chris Van Hollen
Pennsylvania: Matt Cartwright; Brendan Boyle
New Jersey: Bill Pascrell, Jr.
New York: Paul Tonko
Massachusetts: Richard Neal; Bill Keating
Vermont: Peter Welch
New Hampshire: Ann McLane Kuster

In 2008, the ITC was extended for eight years, leading to the huge growth of solar in the US. Leveraging billions of dollars in private investment, 97% of solar installations took place during this time. Costs dropped 73%, while efficiencies of solar panels increased substantially.

The industry faces a steep cliff with the ITC’s looming expiration. Financing is already more difficult for utility-scale projects with long lead times.    

President Obama made both the wind production tax credit and ITC permanent in his budget proposal.

Although the solar industry is far enough along to grow without the ITC, this isn’t the time to put the brakes on – it is the time to accelerate solar as quickly as possible, while eliminating tax breaks for fossil fuels.

More details on how the ITC works:

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