Hidden within a $US2.4 trillion spending bill and COVID stimulus package set to be passed early this week by the US House and Senate, and signed by the President, is a planned two-year extension of the solar investment tax credit (ITC).
It is a welcome continuation to one of the country’s most successful renewable energy policy supports. The solar investment tax credit was first passed back in 2006, supporting an average annual growth of 52% for the solar industry, and resulting in total growth of more than 10,000%.
In turn, the solar industry has created hundreds of thousands of jobs and invested billions of dollars into the US economy.
Originally set as a 30% tax credit for solar systems installed on residential and commercial properties, the ITC has been living on life support since it was first extended back in 2015. This latest two-year extension effectively pushes forward the end of the ITC through 2023.
This latest extension maintains the credit at the lowered rate of 26%, which became effective this year, but as solar technology has increased in maturity it has decreased in cost, therefore resulting in more bang for your buck and maintaining the value of the ITC. The ITC is due to drop again next year, to 22%.
As of writing, the draft text of the bill has not been uploaded to the US Congress website, and as such the specifics of the extension and any potential decreases in the credit rate are unclear.
The ITC extension is included in a joint emergency coronavirus relief and omnibus spending agreement worth nearly $US2.4 trillion – made up of a $US1.4 trillion omnibus spending bill and a $US900 billion coronavirus relief package.
“We have now reached agreement on a bill that will crush the virus and put money in the pockets of working families who are struggling,” said Speaker of the House, Nancy Pelosi.
Of the specific climate-focused amendments, Pelosi explained that the combined spending package “includes sweeping clean energy reforms, R&D enhancements, efficiency incentives, and extends clean energy tax credits to create hundreds of thousands of jobs across the clean economy.
“The package also phases out superpollutant HFCs, positioning the U.S. to lead the world in avoiding up to 0.5 degree Celsius of global warming,” Pelosi added.
The US House and Senate are expected to vote on the package as early as Monday.