Solar Industry Looks to a Five-Year ITC Extension
The ITC, or Investment Tax Credit, was first enacted by the Energy Policy Act of 2005. It has since been extended thrice in 2006, 2008 (as part of the Emergency Economic Stabilization Act of 2008) and again in 2015. The 2015 extension was a result of the trillion-dollar federal spending omnibus that included a tradeoff: lifting the 40-year-long oil export ban in return for the renewable tax credit extensions.
Since its first enactment, the ITC has been a critical tool in the solar industry’s 10,000% growth since 2006. It has assisted home and business owners reap the rewards of an advantageous clean energy incentive, invested billions into the U.S. economy, provided stability for a burgeoning energy field and created well over 200,000 clean energy jobs.
As of this moment, the ITC is on track to step down from 30% to 26% on midnight of December 31, 2019. It will then step down again to 22% for 2021, and finally sunset at a mere 10% by 2022 (for commercial & utility-scale installations only).
On November 19th, the House Ways & Means Committee released a comprehensive tax package with bipartisan support that includes an extension of the 30% ITC incentive for another five years. This package, called the Growing Renewable Energy & Efficiency Now (GREEN) Act of 2019 not only extends the ITC for continued solar growth, but includes incentives for energy efficiency, EV purchases and renewable fuel use. The ITC extension calls for the same step-down schedule, just bumped five years in the future, so the first step down year under this plan would be 2025.
This tax plan release comes after months of mounting pressure on Congress to act before the ITC step-down in December. Last month, 230 mayors from across the country (including local mayors of Alexandria, VA; Leesburg, VA; Baltimore, MD; College Park, MD; Frederick, MD; Rockville, MD; Salisbury, MD) signed on to a letter originated by SEIA (Solar Energy Industry Association) urging an extension of the full 30% credit. Notably, Mayor Sylvester Turner of Houston TX signed onto the letter because 92% of the city runs on renewables.
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