The future of solar energy in the U.S. looks a lot brighter now that Congress has extended the solar Investment Tax Credit (ITC). The extension of the ITC, which saves consumers and businesses that install solar energy systems up to 30 percent, was hailed by renewable energy advocates as a watershed moment, ensuring the continued growth of the industry beyond 2016 when it was initially set to expire.
Here are the basics:
The ITC will be extended at 30 percent across all market segments—utility-scale, commercial and industrial, and residential—through 2019.
It will then steadily decrease:
- 26 percent in 2020
- 22 percent in 2021
- 10 percent, permanently, in 2022
In addition, the commence-construction clause will be extended at the same percent-year rate through 2022, and any project must be completed by 2024 to secure the ITC credit.
The ITC has made the overall growth of the solar industry possible and has led to sharp reductions in the cost of solar energy. Since the implementation of the ITC in 2006, the average cost of solar has dropped by more than 73 percent. Utility-scale costs have dropped by more than 64 percent since 2010, reaching $1.49 per watt in Q2 2015, while residential costs have dropped 48 percent since 2010 to $3.50 per watt in Q2 2015.
Some supporters claimed that ending the tax credit would have drastically disrupted the solar industry, causing installations to plummet and result in the loss of tens of thousands of jobs within the industry. However, thanks to the extension, we can now anticipate long and prosperous growth of the solar sector.
How much growth?
The Solar Energy Industries Association (SEIA) estimates that the extension will allow the following to happen:
- Installed solar power capacity in the U.S. will exceed 100 gigawatts by the year 2020.
- The installed solar power capacity will represent more than 3.5% of the total power grid.
- By 2020, solar power investment is expected to reach 30 billion dollars per year.
- A total of 420,000 jobs will have been created by the solar industry alone.
The ITC extension will also contribute to meeting the goals of the Clean Power Plan set forth by President Obama, which aims to cut down carbon emissions by 32 percent by the year 2030, compared to 2005 levels.
The ITC is one of the big reasons why solar power is so popular today in the U.S.
And it’s a great incentive for everyone to take the leap into the future of clean energy, but if you’re looking for additional reason to go solar, contact us for a free consultation. Direct Energy Solar’s expert installation team is more than happy to discuss the countless advantages of this clean, affordable and sustainable technology.