Should we be concerned about the new Republican Administration and the future of Solar Power?
Due to its tremendous growth, popular appeal, and ever improving economics, solar power enjoys increasingly bi-partisan support on the Hill and in Governors offices around the country. Due to this, we predict very little, if any, impact on solar growth from the current Administration and/or a Republican Congress. To help explain this, let’s look at the three main drivers of successful solar economics for the typical solar consumer – Federal Tax Credit, SRECs, and cost of solar equipment:
Federal Tax Credit: 30% of system cost. This has been an enormously successful tax incentive enabling wide scale deployment of solar on both a utility and distributed scale. Economies of scale have helped to drive the cost of solar; while further increasing demand – allowing the solar industry to grow exponentially. This has been applauded by both major political parties for the private capital investment opportunities and huge job growth in the solar sector. In fact, the US solar industry currently employs more people than the US oil, gas, and coal industries combined.
The 30% solar investment tax credit (ITC) was extended by Congress (many of whom were Republican) in late 2015 and is designed to decline in future years to eventually fall back to a permanent 10%. The ITC schedule from the December 2015 legislation is as follows:
2016 – 2019: The tax credit remains at 30 percent of the cost of the system. This means that in 2017, you can still get a major discounted price for your solar panel system.
2020: Owners of new residential and commercial solar can deduct 26 percent of the cost of the system from their taxes.
2021: Owners of new residential and commercial solar can deduct 22 percent of the cost of the system from their taxes.
2022 onwards: Owners of new commercial solar energy systems can deduct 10 percent of the cost of the system from their taxes. There is no federal credit for residential solar energy systems.
In a nutshell, most in the solar industry believe it would be political suicide for the majority of congressional representatives to vote for a repeal of this enormously successful Investment Tax Credit that is scheduled to decline anyway. There are too many solar jobs and solar projects in Republican districts for the majority of Republicans to consider advocating for repeal. The horse is out of the barn and solar is winning!
SRECs: Maryland and Washington DC offer Solar Renewable Energy Credits to solarized homes and businesses. This is a State/District-mandated incentive that, if anything, shows signs of expanding among the 29 States that have currently adopted an RPS (Renewable Portfolio Standard). This is largely due to the fact that State Houses wish to support the exponential renewable energy sector job growth amidst the scheduled, declining Federal Support.
Solar Technology Costs: Advancing technology, manufacturing scale, high adoption rates, and investor confidence in solar technology continue to drive down solar project costs. We don’t see this momentum changing anytime soon.