Home solar and Business solar just got a boost in the arm President Obama quickly signed a massive spending bill that included the extension of critical tax credits which have helped the industry grow to where it is today. Our Congress acted reasonably and responsibly in this effort passing the extension one year before their expiration reacting to organized efforts of grassroots supporters and the determined lobbying effort by the solar industry.
The growth of solar has been accelerated by individuals, businesses and utilities all looking for better ways to see to it their tax dollars are spent in ways they agree with. If you have ever complained about how your hard working tax dollars are spent, an investment in rooftop solar is one way to guarantee the money you would otherwise be sending to Uncle Sam is spent on something a supermajority of home and business owners agree with, financial stability and clean air.
The Bush era tax cuts in 2006 increased the tax credit for business solar systems to 30% while 2008 President Obama expanded the tax credit to solar water heating and the solar industry succeeded in achieving its first multi-year extension. Ever since the solar industry and its customers have benefitted from double digit expansion across the board.
The stability and assurance of the solar tax credit has provided businesses and manufacturers the opportunity to invest in new technology, new manufacturing and to keep up with the demand for new solar installations. The result has been remarkable.
The cost of home solar panel installations has fallen by over 60% since 2008 making solar more affordable than ever to those who have the up front capital to pay for them. New financing models, from solar leases, solar power purchase agreements and solar ownership as a service models have emerged giving the ability for individuals to install home solar panels for zero down at lower costs than they pay for fossil fuel.
Had the solar investment tax credit not been extended the cost per kWh of solar would have become uncompetitive with traditional heavily subsidized fossil fuel power sources for both utility and home solar investments. An estimated 100,000 jobs would have been lost and states considered “fringe” markets would not be on the road map for solar for another 4-5yrs, including the southeast, like Georgia, Florida, Tennessee and South Carolina.
Home Solar Customers Must Act Now
The extension of the tax credits for solar energy fall into two separate categories. One set of rules for home solar installations and one set of rules for business solar investments. The extension of the tax credits has created another five years of certainty for both however it is designed to encourage more investment for home solar installation than business.
For both business and home solar installation the extension of the solar energy tax credit are as follows:
30% Before 2020;
26% after 2020 but before 2021;
22% after 2021 but before 2022.
Business installations are eligible for the permanent 10% tax credit. Business installations such as commercial, leased, third party owned and utility systems after 2022.
Residential, non-business customer owned (non-leased) still have to be placed in service during the tax year they intend to qualify for and definitely before 2022 to receive the 22% tax credit and will not be eligible to receive the 10% tax credit beyond that date.
Tax Credit Extension Schedule
One additional key policy that was written into the extension all but guarantees the largest growth in business and utility scale solar in America’s history in the next three years. Qualifying business solar investments are now able to claim the tax credit in the year in which construction had begun on their solar project as long as that project is completed by December 31, 2023. There will likely be a massive boom in utility and commercial projects beginning from now through 2019 to guarantee they lock in their 30% tax credit.
The industry’s effort and the support of Congress has put solar on the map for another 6 years of growth and in that time frame the industry hopes to no longer need to be part of the federal tax code. The extension also makes it clear that customer owned systems should act sooner than later to make investments in their home if they plan on owning their solar system. Making solar more affordable to everyone is what is best for our energy infrastructure, our economy and our planet.