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President Obama: Extend Solar Tax Credit... Congress: Don't make me laugh!

02/05/15

  07:07:00 am, by Laurel Hamilton   , 364 words  
Categories: Solar Economics, Solar Tax Incentives, Ranting, Solar Policy

President Obama: Extend Solar Tax Credit... Congress: Don't make me laugh!

Two weeks ago I included the looming 2016 expiration of the federal Solar Investment Tax Credit (ITC) as one of the “Top 5 reasons you shouldn’t wait to go solar“. The 30% ITC rebate for residential and commercial solar projects is slated to drop to 10% for commercial projects (effectively stopping utility-scale solar growth) and to zero for residential projects (making going solar much less feasible for many homeowners). I mentioned that the likelihood of an extension is far from certain given our partisan federal ‘climate’.White House Flickr Photostream

Then…on Monday the White House released President Obama’s fiscal budget for 2016. To my delight the budget includes:

  1. Boosting clean energy funding to $7.4 billion;
  2. The Clean Power State Incentives Fund allocating $4 billion to encourage states to exceed the minimum requirements for cutting emissions; and
  3. The permanent extension of the solar Investment Tax Credit!

The $7.4 billion figure is up from the $6.9 billion proposed in Obama’s fiscal 2015 budget, a 7.2 percent rise, and over the $6.5 billion actually passed by Congress for this year. The extension of the ITC and further state incentives to reduce emissions would be immensely valuable to keep the ball rolling in the solar field. Given that solar is booming - providing over 170,000 living-wage jobs and eliminating over 13 million metric tons of harmful CO2 emissions in 2014 alone - it makes sense to continue to incentivize. 

However, it may come as no surprise to hear that some lawmakers have said they plan to block the President’s budget priorities entirely. An article in Politico titled “Republicans: Obama Budget ‘Laughable’” cites many congressional Republicans disdain for the budget.

“Obama’s budget is a retread of past proposals that died instantly on the Hill.”
Senate Finance Committee Chairman Orrin Hatch (R-Utah)

The website www.gop.gov cites the singular case of Solyndra as definitive evidence to oppose funding clean energy…despite also claiming to support job growth. (See here as to why Solyndra just doesn’t matter.) With Republicans now controlling both the Senate and the House of Representative, this party line opposition will be a serious challenge to overcome.

Even with the President himself in favor of extending the ITC, and improving funding to support clean energy, the fate of federal support for the solar industry is still quite uncertain.

Watch this space.

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Comment from: mary helen glenn
mary helen glenn
5 stars
We all need & want solar and wind 10 years ago. We must have permanent tax credits for solar, wind & geothermal. Projects NOW!
02/07/15 @ 13:24
Comment from: angie  
angie
4 stars
The main problem is that middle class wage earners CANNOT afford the upfront price for Solar or Geothermal without maintaining the current 30% tax credits to carry forward for more than a few years. Middle Class DO NOT make enough money to be paying $10k worth of taxes per year. So this, once again, is for only the higher income tax brackets to utilize as a tax shelter. The wording should be that the 30% tax credit can be carried forward until it is used up!!!!!!!!!!!!!!!!!!!! Then the ability to afford these systems will be opened to the middle class wage earners and THEN this country can work to get to the point where we actually maintain our standard of living plus be using less than 1/3 of the energy we currently expend to do so.
04/30/15 @ 18:49
Comment from: Jim Jenal - Founder & CEO
Our typical residential client purchases a 6 kW system for right around $4/Watt (sometimes more, sometimes less - and some clients purchase systems as small as 3 kW, though only in Pasadena). That means a $24,000 price tag. In SCE territory, there are no rebates so the 30% ITC come to $7,200. If you split that over two years, that comes to $3,600 a year, or about the tax you would owe (absent other deductions) with an income of roughly $30,000. So, for most people who can afford to purchase solar, the 30% ITC can be used in two years, and reduces their cost of going solar by a full 30%.
04/30/15 @ 19:20
Comment from: Chris Reilly  
Chris Reilly
5 stars
The 2016 sunset of the 30% solar ITC will be a death knell to many solar installers. Hundreds of thousands of jobs that have been create will go away overnight. It has more than paid for itself in economic activity, but the forces of the fossil fuel industry are lined up against it. We all need to hammer our congressmen to support Obama’s recent 2016 budget proposal that extends this credit permananently. If they are not called to give a logical reason for their support of killing this, they will be let off the hook.
05/08/15 @ 06:11
Comment from: Jim Jenal - Founder & CEO
Hi Chris - I agree that installers need to make their voices heard with their Representatives in Congress as the end of the ITC is a very big deal. Keep in mind that this is worse for the smaller installers because we don’t install residential projects as “commercial” installs (since we don’t own the systems and bill consumers through a lease or PPA). The folks that do that will still be able to claim 10%, but our residential clients will get nothing. When the ITC was expanded, I’m pretty sure that Congress never contemplated that a system on someone’s home would be counted as a “commercial” system for purposes of the ITC. Jim
05/08/15 @ 06:52


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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
Run on Sun also offers solar consulting services, working with consumers, utilities, and municipalities to help them make solar power affordable and reliable.

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