5-21-2015 Three Reasons the Solar ITC Should Be Extended
There’s a lot of debate in the solar world right now about whether or not the 2016 expiration of the residential solar Investment Tax Credit (solar ITC) should be renewed. It was originally introduced in 2006 as part of the Energy Policy Act of 2005, and it managed to gain a few extensions, making December 31, 2016 the new expiration date.
There is little doubt that the solar ITC has significantly impacted the solar industry and helped facilitate its growth. As its expiration date nears, the solar industry must begin tackling the question of the solar ITC’s extension. Should it or shouldn’t it be extended?
Those who want to extend the residential solar ITC often cite three reasons this crucial piece of legislation should live to see another day:
The Solar ITC creates jobs
In 2005, before the solar ITC was available, the solar industry employed 15,000 workers. Now, there are almost 174,000 people working in the solar industry. Additionally, solar employment has grown by 86% in the last four years. If the solar ITC expires, the solar industry may say goodbye to 100,000 jobs.
The only businesses that will be able to survive the impacts of the solar ITC expiration are the top 10% of solar installers and providers – the major companies. The other 90% of businesses, mainly small residential installers, will close their doors in 2017 because they aren’t equipped to handle the industry’s changes.
It helps solar grow
Annual solar installations have grown by over 3,000% since the ITC’s introduction in 2006, with a compound annual growth rate of 77%. In 2014, a solar project was installed every two and half to three minutes. It’s estimated that about 32% of the United States’ electric generating capacity in 2014 came from solar.
Without the solar ITC, homeowners and businesses won’t have as much incentive to purchase rooftop solar systems. This could stifle the solar industry’s growth and set it back to 2014 levels instead of helping it advance.
Fossil fuels and nuclear get subsidies
Despite the Obama administration’s call for decreasing fossil fuel subsidies, the federal government hasn’t managed to cut the financial cord yet. Since Obama took office in 2009, federal fossil fuel subsidies have increased by 45%, from $12.7 billion to $18.5 billion.
Most of the increase is due to increased fossil fuel production. Companies that produce more receive more money from the government. The solar advocates who argue for extending the solar ITC claim that if Obama is going to hold onto his “all-of-the-above” energy strategy he can’t allow the solar ITC to expire.
The Solar ITC’s Future
The Solar Energy Industries Association (SEIA), the organization responsible for the ITC’s introduction, is lobbying Congress for the tax credit’s extension. As a new Congress takes office, SEIA is determined to make its vision of a renewed ITC a reality. Only time will tell just how successful their efforts will be.