BLOG: Why We Still Need the Solar ITC
By Richard Payne, ReNew Petra
The solar investment tax credit (ITC) has had a profound impact on the solar industry in the United States. It started in the early 2000s as a way to nudge the solar industry forward and encourage investment. Since then we’ve seen a 52 percent average annual solar growth, plus the solar industry has grown by more than 10,000 percent since its inception.
The solar ITC currently calls for a 30 percent tax credit for installed solar systems. However, it is scheduled to step down to 26 percent next year. The ITC will then fall to 22 percent in 2021, and permanently go down to 10 percent for commercial and zero percent for residential in 2022. The reduction and elimination of this tax credit could impact the solar industry’s growth, an industry that is vital to our clean energy future.
In an effort to continue the growth of the solar industry, Reps. Mike Thompson (D-Calif.), Paul Cook (R-Calif.), and Brian Fitzpatrick (R-Pa.) recently introduced the Renewable Energy Extension, legislation that would extend the full 30 percent solar ITC for five years, rather than begin a phase-out at the end of this year. The possible inclusion of tax credits for battery storage could have an even greater impact on the solar industry. Storage can be seen as the final piece to making renewable energy a leading source of power generation in the U.S., because it allows companies to turn intermittent power into firm power, which has been one of the major roadblocks to solar being a dominant energy generator.
We know about the benefits of solar and the ITC firsthand here in North Carolina. North Carolina is the second-largest producer of solar energy in the U.S., with more than 5.5 GW installed, which is enough to power more than 660,000 homes annually. Most of that energy comes from large, utility-scale projects, like the ones ReNew Petra builds, owns and operates. In recent years, we’ve seen an increase in utility-scale projects, commercial and industrial installations, and residential solar due to the benefits of the solar ITC. Beyond providing safe, reliable electricity to the grid, clean energy benefits North Carolinians by creating over 42,000 jobs through employment opportunities, lowering electricity bills, and building healthier communities.
We’re now more than halfway through 2019, the last year of the current ITC before the step down, and the solar market in the U.S. is outperforming recent years. In the first quarter 2019, the U.S. reached 67 GW of total installed capacity, enough to power 12.7 million American homes, according to SEIA’s U.S. Solar Market Insight Report, making it the largest first quarter in solar market history. And for the first time ever, the U.S. received more power from renewable energy than coal.
But to maintain this success, extending the solar ITC is important. With the current volatility of the administration’s tariffs, the cost of key solar photovoltaic equipment is increasing. The solar ITC extension will help counteract these headwinds and further ingrain our path towards a clean energy future. In a time of weakening economic data, the support of Congress to keep the renewable energy economy marching forward will continue to create jobs and build a more sustainable future that will be recognized for generations.