At Run on Sun we don’t take partisan stances on politics. We believe everyone, regardless of politics, benefits from harnessing the unlimited resource of sun-powered PV systems. However, the recent election has raised questions about the future of federally-backed support for solar - specifically the federal solar investment tax credit (ITC). The short answer is, we are optimistic the current plan for the ITC to continue for three years at 30% then gradually sunset after five will be unaffected. Here’s why:
The fact is, the ITC is federal law and laws are not easily changed. Even if it did somehow manage to be changed before the 5-year planned sunset, we are confident our state will step up to make sure adequate support continues to make solar an economically viable option for the public. Never fear! Solar is here to stay.
(Thank you to CALSEIA and Executive Director Bernadette del Chiaro for the inspiration for this blog and for their invaluable efforts to advocate on behalf of the solar industry.)
There can be no doubt, 2015 was an amazing year for solar. As we reach the end of the year, here’s our look back on the top five reasons solar soared in 2015!
While not the most important reason for solar overall, we would be remiss if we didn’t acknowledge that thanks to our wonderful clients, 2015 was our best year by far! From our largest project ever for our favorite water company, to adding another school to our portfolio, to the many residential projects that we built all across Southern California, 2015 was a great year.
We took great pride in being recognized, for the third year in a row, as being one of the top Solar Contractors in the country by the wonderful folks at Solar Power World, and even more pride in the scores of referrals that we received from our ecstatic clients.
We can’t wait to meet and exceed our success this past year in the New Year ahead!
Political leadership on dealing with Climate Change was finally in evidence this year, and the resultant policies are, inevitably, pro-solar. Exhibit A was California Governor Jerry Brown pledging to have the state generate 50% of its electricity from renewable sources by 2030, a mere fifteen years away! Said the Governor:
I envision a wide range of initiatives: more distributed power, expanded rooftop solar, micro-grids, an energy imbalance market, battery storage, the full integration of information technology and electrical distribution and millions of electric and low-carbon vehicles.
We are on board with that!
But political leadership extended far beyond the borders of our great state in 2015! More than 190 countries came together in Paris to agree to the most far-reaching accord ever to address Climate Change, and lots more solar was high on their list of ways to achieve a more sustainable planet.
To be sure, none of these actions were without their political opponents, but it is impossible to deny that 2015 marked a major turning point in the public’s perception of the need to act, and those views were increasingly adopted by the world’s politicians.
Ok, we have to give the man his due — Elon Musk’s outlandish PowerWall announcement changed the conversation around smart energy storage (and our blog post debunking his most outrageous claims became our most viewed post of the year!). Indeed, storage went from being a topic hardly ever mentioned by a potential client, to something that nearly everyone did after Elon did his thing.
Unfortunately, the hype still leads the market, and mature products are still not really available. But that is changing rapidly, and from our perspective that can’t happen soon enough.
There had been great angst in the solar community about the future of net metering — the means by which solar owners get compensated for excess energy that they put out onto the grid — in California (and elsewhere). Decisions about net metering in other states that bent over backwards to appease utility demands only ratcheted up the anxiety in California as the state’s Public Utilities Commission deliberated over competing proposals for Net Metering 2.0 - including utility schemes that could have gutted the market for solar.
Fortunately our fears were not realized and the preliminary decision — due to be made final in January — was quite solar friendly. Once we have a final decision we will report on it in depth, but for now this looks like one of the biggest pro-solar developments of 2015.
The number one, most amazing, and most amazingly unexpected development to boost solar in 2015 is unquestionably the major extension of the 30% federal solar investment tax credit (ITC).
Given that the ITC was previously scheduled to expire at the end of 2016, solar installers, potential clients, utilities, and building departments alike were all bracing for what could have been a hellish second half of next year as all involved scrambled to get systems commissioned before the deadline.
Instead, the full 30% will continue through 2019, 26% in 2020, 22% in 2021, and 10% thereafter. Moreover, the “placed in service” language — which required a project to be commissioned before the credit could be claimed, thereby leaving installers and clients at the not-so-tender mercies of the local utility — was replaced by the far more manageable, “commenced construction” requirement.
The net benefit of this will be a more orderly market, driven by rational purchasing decisions rather than a panicked stampede to meet an arbitrary deadline at the end of next year. And beyond that, keeping the ITC in place for many years to come will help to grow solar in ways that would not have been possible otherwise. The industry, the economy, and the environment were all winners here.
So that’s our wrap on 2015 — truly a great year for solar! But we are betting that 2016 — with your help, of course — will be even better! Watch this space!
Happy New Year!
Today is a great day for solar! The uncertainty around the ITC (federal solar tax credit) is finally over and we can all rest assured that the solar industry will not fall off a cliff come December 31, 2016!
You may have heard the big news about the bipartisan passing of the year-end budget deal to effectively not shut down the government for one more year. But you may have missed the news that they also passed a 1.1 trillion dollar omnibus spending bill including the extension of many tax credits. Guess which exciting tax credit was included?? That’s right, the solar ITC and other renewable energy tax credits were included in HR 2029. The spending bill is the result of a deal between party leaders. The unfortunate cost of the five-year extension (and other Democratic priorities) is the lifting of the 40-year-old oil export ban and a series of permanent tax cuts.
This morning HR 2029 passed the US House of Representatives (316-113) and the US Senate (65-33). This means that the Omnibus funding bill goes to the President for his final signature, which he has already agreed to do. This is a great day for the solar industry, living-wage American jobs, the growth of clean power and all the policy advocates out there fighting to extend the ITC.
Here are the details regarding the new extension of the solar tax credit:
“We commend members of Congress in both parties for taking this bold step and we look forward to delivering on the promise that this policy now offers all Americans. Thanks to the ITC, solar energy will add 220,000 new jobs by 2020, and with this extension, the solar industry can achieve its pledge of employing 50,000 veterans. Clean solar energy will cut emissions by 100 million metric tons and replace dozens of dirty power plants.
Importantly, in the follow up to the Paris accord, this establishes the United States as a model for the reduction of greenhouse gases. A five-year extension of the ITC will lead to more than $133 billion in new, private sector investment in the U.S. economy by 2020. And much of this growth will come from small businesses, which make up more than 85% of America’s 8,000 solar companies.
Solar power in this nation will more than triple by 2020, hitting 100 GW. That’s enough to power 20 million homes and represents 3.5% of U.S. electricity generation.”
Today we celebrate the progress our country has made. We know the tax extension will only serve to help more and more property owners take advantage of all the benefits of solar energy. Happy Friday and Happy Holidays everyone!!
UPDATE - 12/16 - Congress unveils a potential 5-Year Extension!
On Tuesday, Congressional leaders unveiled a behemoth spending bill (as in 2,009 pages!) that includes an extension for the solar tax credit. As proposed, here are the details:
To be sure, this is not yet a done deal and Congress could balk on passing the bill, so watch this space! Better yet, use the form below and tell your Representative to support the Consolidated Appropriations Act, 2016.
We have written about how the federal Investment Tax Credit - which provides solar system owners a credit on their taxes worth 30% of the system cost - is set to expire at the end of 2016 and the havoc that will cause in the industry. We have been skeptical that the present Congress would act to extend the credit. But activism is always better than skepticism, and right now there is a chance to act to save the ITC!
It is a classic Congressional tradition - horse trading some call it, logrolling is another term of art - but at the end of the day it means compromise. It turns out that there are tax credits that Republicans love (e.g., credits to businesses for various types of purchases) and tax credits that Democrats love (e.g., the earned income credit and others that generally help lower income constituents). Turns out that there are enough of those credits on both sides (it is left as a challenge for the reader to determine which side of the aisle is supporting the solar ITC) to make it possible, maybe even likely, that a compromise bill could get through.
But there are many reasons why it might fail. Deficit hawks in the House might try to derail it over its cost. Democrats might complain it gives away too much to Big Business. In short, it is the sort of compromise in which everyone can find something to love, as well as something to hate. But can it pass? That’s where you come in.
Below is a form where you can get the contact information for your member of Congress just by entering your zip code…
Take just three minutes to look up your Representative and give them a call. When you get them on the line, tell them to support the longest possible extension of the solar ITC. Three minutes to save 30% on future solar installations - that’s what we call time well spent!
One of the chief economic benefits of going solar is the 30% Investment Tax Credit (the “ITC"), but it is scheduled to go away at the end of next year. Here is what you need to know now if you hope to save yourself some serious coin on your solar system.
There are three economic benefits from going solar: rebates from the utility, savings on your utility bill, and the ITC. For clients in the Run on Sun service area, only PWP and LADWP are presently offering rebates (sorry SCE folks) but at 40¢ and 30¢ per AC Watt installed, these rebates top out at roughly 10% of your cost. Monthly savings from solar will vary depending on how big a user you are and what rate structure you are under. Typically, SCE customers save more with solar because their rates are that much higher.
But the one dominant factor that has helped to make solar more affordable, particularly as rebates have gone away, is the ITC. A true tax credit (as opposed to an income deduction), the ITC is valued at 30% of the total cost of the system (less any rebate that might have been available). For example, a 5 kW solar system in SCE territory that costs $4.00/Watt will see $1.20/Watt coming back as a credit on the system owner’s taxes. (Oh, yeah, you have to own the system to capture the ITC - part of our #1 Reason to avoid a Solar Lease!) That’s a $6,000 credit - pretty sweet! And commercial clients not only get the ITC, they also get accelerated depreciation, making the tax advantages of solar even more attractive.
And yet, unless Congress acts (and really, does anyone have confidence in the ability of this Congress to do much of anything?), this will all end come December 31, 2016. (Ok, small caveat - commercial projects will continue to get 10%, but for residential clients it will be nada, nothing, zilch.)
I can hear you already saying, come on, that’s over a year away - why are you raising this issue now? Well aside from the old warning: “Caution - dates on the calendar are closer than they appear!” – it is important to understand what is likely to happen next year. Every solar company out there will start advertising about the need to “act now” only this time they will be right. As more and more people realize that they are about to leave a whole bunch of money on the table, the crush to get projects in the pipeline and completed before the deadline will mean more demands on already understaffed city building departments (many of whom routinely take six weeks or more now to approve even the simplest solar project), inspectors, and utility staff to process an unprecedented flood of applications.
As we move through next Spring, many solar companies will already be booked so completely that homeowners who are just waking up to the problem, might find themselves in a pipeline with no guarantee that their project will be completed in time to qualify for the ITC.
So what to do?
Well, for the good of the solar industry as a whole you should contact your Member of Congress and urge him/her to support the extension of the ITC. If you have friends and family who live in more conservative areas, be sure to urge them to do the same.
But as for your own solar project, the time to get started is now! Don’t be the sad-sack who gets shut out of affordable solar because they waited too long.
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