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!
As a Pasadena-based company, Run on Sun is proud to support our local public radio station, KPCC. A truly invaluable resource, KPCC is Southern California’s premier NPR affiliate bringing comprehensive, unbiased news coverage to our community. However, as a public station, they can only do so through the support of listeners. Which is why, as daily listeners ourselves, Run on Sun is donating to the annual KPCC Winter Online Auction.
So as you recover from the trials of yesterday’s annual overeating holiday, avoid the dangerous Black Friday shopping sprees! Instead kick back and check out the online auction going live on November 27th! Many exciting gifts and adventures are included in the long list of items up for grabs. And for one lucky homeowner, the gift of solar just got a huge discount!
This is the largest discount Run on Sun has offered on a single residential solar project to date! But what better way to celebrate the holidays than to give the gift of solar?! With the help of this steep discount you can be on your way to continued energy independence, bill savings, and a greener future.
So don’t delay, the online auction closes December 6, 2015 at 1:00 PM so be sure to keep an eye on your bid.
Request your free solar site assessment today to ensure your property is a good fit. Don’t worry, in the unfortunate event that you win the auction and your home turns out to be a poor candidate, Run on Sun will honor your gift certificate with a friend or neighbor of your choice.
Levelized Cost of Energy (LCoE) — The cost of energy from a solar power system, over the lifetime of that system, measured in $/kWh. LCoE is calculated by taking the total cost of the system minus incentives but plus any equipment replacement or other maintenance expenses, and divided by the total energy produced by the system over its lifetime.
Return on Investment (ROI) – Return on Investment is a calculation that determines how soon a particular investment will be paid back (the “payback period") based on a series of anticipated cash flows, specifically, the initial expense, any maintenance expense, rebates, tax incentives, and savings from the energy produced by the solar system.
Internal Rate of Return (IRR) – A common measure of the relative value of competing investments. Technically it is the interest rate for which the present value of all of the future cash flows associated with a given project is equal to the cost of the project. The higher the IRR the more desirable the investment.
Payback – This is the time when you “break even". Meaning it is the point when the total cost of the solar system (including any maintenance costs) is paid back from savings on avoided energy purchases, rebates, and tax incentives.
Annual Solar Savings — The annual solar savings is the energy savings attributable to a solar system relative to the energy requirements of the same building without solar.
Solar Investment Tax Credit (ITC) – The ITC is a federal tax credit for solar systems commissioned on residential and commercial properties before December 31, 2016. The ITC is a dollar-for-dollar credit worth 30% of the cost of a solar power system applied to the system owner’s income taxes. The ITC will reduce to 10% for commercial and ZERO for residential solar come January 2017 unless Congress extends this deadline.
Solar Lease – A contractual agreement by which the property owner agrees to let a third party install and own a solar electrical system on your property and you pay rent for this privilege. If you’ve been paying attention at all, you are aware that this is a horrible idea. We even wrote an entire blog about why you should avoid solar leases.
Solar PPA – A power purchase agreement (PPA) is a long term contract to purchase energy from a third-party owner of a solar power system at a defined cost which may rise over time. In a PPA, the homeowner pays a fee per kWh of energy produced as opposed to a flat monthly fee in a lease agreement. Here’s the kicker, if the system produces more energy than you consume…and is going back to the grid…you get a credit from the utility for this excess energy but you also are paying for this excess energy to the third party owner of the system. Whether those fees cancel each other out or not varies.
Congratulations! You’ve passed Solar Terminology 101,102, and 103! You’re officially an expert on solar concepts! Hopefully the “Greek” terms you’ve been reading as you do your research into going solar will make a lot more sense. If you do decide solar is right for you you’ll have a better understanding of how the big electronic system you purchased and installed on your property really works. Lastly, we hope that this information will help prevent homeowners from being taken advantage of by unethical solar salesmen who really don’t know the first thing about solar! After all, knowledge is power!
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