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!
Monday marked the onset of what may be the most important (and most exciting) gathering of world leaders in human history. From November 30 to December 11, representatives from more than 190 countries are coming together to reach agreement on global climate efforts at the United Nations Conference of Parties (COP21) in Paris.
There is a great deal of optimism around the world as national heads come together with commitments in hand. This is a huge step forward compared to past climate conferences which have failed to reach any target that the world could agree upon. It remains to be seen if this positive momentum will result in an accord with the power to spur change on a global scale.
In preparation for the conference, the United Nations’ Intergovernmental Panel on Climate Change (IPCC) evaluated the current research (over 30,000 papers) on the science of climate change. The key takeaway in their synthesis: Scientists are now more certain than ever that climate change is real; it’s caused by human activities – especially the burning of fossil fuels; and it’s already impacting people around the world, from rising sea levels to more extreme weather events. Hence the overarching goal in Paris this week is to frame a deal to prevent Earth from warming above the point of no return (more than 2°C).
In the months leading to the conference nearly every country on the planet submitted their commitments to reduce greenhouse gases based on the IPCC report, called Intended Nationally Determined Contributions (INDCs). The United States’ INDC outlines a commitment to cut emissions by 26-28% below 2005 levels by 2025, mostly by reducing CO2 emissions from coal-fired power plants.
All 156 INDCs, representing 97.8% of global emitters, will be plugged into a final document crafted through the high level negotiations. The COP21 final accord will actually be divided into a “core agreement,” laying out the broad objectives for emissions reduction and how to pay for poor nations’ efforts, and “decisions” describing how these objectives will be achieved.
One hot issue to be settled in Paris is over the legal status of this document. A formal treaty would need the impossible approval of the Republican-controlled US Senate. Instead, President Obama will likely sign off on the accord as an “executive agreement.” There seems to be an understanding that the “agreement” would have more binding legal status than the “decisions,” which would include the national pledges and be subject to revision. The US has held that they will not sign any legally binding emissions targets.
While the commitments to cut emissions by the world’s countries is a great start, without legally binding targets and accountability, these promises hold little weight. It will also be interesting to see if, and how, leaders will establish a path forward with plans to reconvene and re-affirm their targets regularly.
The unfortunate reality is that even if every country followed through with their commitments, scientists estimate that global warming will be about 2.7 degrees Celsius above pre-industrial levels. Given that a 2 degree increase is the limit necessary to avert the worst impacts, we will still need to focus on adaptation as well as mitigation to climate change. But on the bright side, it’s a lot less warming than would happen if we continue the status quo without curbing any emissions at all!
This summit isn’t the end of the fight to limit climate change. But considering there has never before been international agreement on climate efforts - the Kyoto Treaty never got off the ground, due in large part to the failure of the US to join - it is a huge step to come together in the battle. As technologies such as solar improve and countries become more confident in their ability to transition to cleaner energy, they can step up their action over time.
Renewable energy stands out as the most common strategy for meeting targets out of all of the INDCs! This is a great sign of growing prospects for the solar industry. According to research by the World Resources Institute, if Brazil, China, the EU, India, Indonesia, Japan, Mexico, and the United States follow through on their commitments, the amount of clean energy installed will more than double by 2030!
The US targets were largely based on the projected outcome of Obama’s Clean Power Plan, which limits greenhouse gas emissions from coal plants and aims to get 20% of electricity from renewables by 2030. The Clean Power Plan has yet to be approved by the Senate and has significant opposition. One can hope that the COP21 and international pressure to act will help on this front. But in a climate where federal tax credits are under threat and state-level clean energy incentives are rapidly drying up, the US commitments on an international stage could be an important backstop to helping the renewable energy sector grow.
Outside the negotiating rooms, thousands of business leaders, state officials, activists, scientists and others from the private sector are also holding events and meetings. The mere existence of the political agreements taking place will lead to increased investment in the renewable energy sector. While the value of political will to accomplish the enormous task of an energy transition shouldn’t be underestimated, the private sector is likely where the real growth will occur without the partisan challenges of the government.
On a final note, we at Run on Sun are thrilled about the events in Paris this week. As the international community finally comes together to tackle climate change our optimism about the world’s ability to act meaningfully is renewed! However, the work that must be done doesn’t end this week. Next week, next month, next year and on and on the fight will continue. Governments, the private sector, and even individuals must continue to act every day on behalf of the only planet we’ve got. Going solar is one of the best ways to reduce your emissions impact from your home or business. We look forward to doing our part!
You may have heard that there are forces afoot - brought to you by the investor-owned utilities - that would lead to a “catastrophic” diminution of savings from solar power systems. Stories from the LA Times, to CNBC, to even the Motley Fool all are proclaiming that change is coming to solar and the end is in site for any real solar savings. To which we say - not so fast. Take a deep breath and read on to see our take.
For example, just today the LA Times ran a story in the Business section quoting solar customers who were “just so angry” over not having access to renewable energy credits (RECs) under the state’s new renewable energy targets law. Yet, that isn’t a change to past practices – no residential client has been able to sell RECs on the open market.
Similarly with the upcoming changes in the state’s net metering rules - while the investor owned utilities, including our own Southern California Edison, are lobbying like mad to make solar less economically appealing, no decision has yet been reached. Moreover, the California Public Utilities Commission (which is charged with resolving this issue) has consistently sided with the solar industry, and most likely will do so now. If they don’t, there will still be the option of seeking a legislative fix before the new rules can go into effect.
And that raises yet another point that counsels for a less breathless approach to all of this: the new rules won’t take effect for at least a year, and clients who install solar before then are locked into the present, solar-friendly net metering rules for the next twenty years!
So let’s recap:
But there is one catch here - the second half of 2016 is poised to be crazy with lots of consumers trying to get their projects completed in time to take the tax credit. This will invariably lead to a real crunch and folks who wait too long will miss out. If solar is in your plans for 2016, the time to get started is now!
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