Great news for businesses looking to go solar! On the heels of the landmark global climate agreement in Paris, the U.S. Congress today voted to extend the Investment Tax Credit (ITC) for solar energy investments by five years. The bill now goes to President Obama who plans to sign the bill today. This decision will help thousands of businesses across America achieve savings and sustainability with advanced solar technology.
The federal government currently provides businesses that install solar panels a tax credit equal to 30% of the total solar installation price. Just last week, that credit was set to drop down to 10% for solar projects unfinished by the end of 2016.
Now, thanks to a massive national outpouring of support for solar energy, the full 30% tax credit for commercial solar installations has been extended through 2019. Then, it will ramp down to 26% in 2020, 22% in 2021, and to 10% in 2022 for commercial solar installations. The bill also includes an important “commence construction clause” that extends the credit to solar projects that have started development before the deadlines listed above, as long as they are completed by the end of 2023. In other words, new solar projects need not accelerate dramatically to finish construction in order to qualify for these tax credits.
This vote of confidence in the American solar industry is testament to the incredible progress we’ve made since the tax credit was created in the Energy Policy Act of 2005. Solar installations in America have grown by an average 76% annually as our industry has achieved maturity and economies of scale. Looking forward, a five-year extension of the ITC will allow for an additional 25 gigawatts of solar installations across the country, a 54% increase compared to projections without the ITC extension, according to GTM Research.
The extension of the investment tax credit provides more flexibility for businesses looking to go solar in 2016, and it will help to alleviate the anticipated operational bottleneck for commercial solar providers. With this news, we can now focus all of our energy on providing our commercial energy customers with the most financially beneficial and environmentally responsible energy solutions, without having to accommodate policy-driven market volatility.
If your business is looking for ways to reduce operating expenses next year, now is the perfect time to consider an advanced solar energy installation. The extension of the solar ITC, coupled with flexible financing solutions, will help to ensure strong IRRs and ROIs for new commercial solar projects. With the possibility of slowly rising interest rates and changes coming to California’s net metering policy, now is a prudent time to finance a commercial solar project and start saving on your energy bills.
Our team of solar experts is ready to examine your energy bills and to provide a no-obligation commercial solar evaluation. Let us show you how solar technology could help your company’s bottom line and our planet.