Dive Brief:
- With Congress poised to pass an omnibus spending compromise that would extend the solar investment tax credit, at least one analyst has pointed out a potential flip-side to what looks to be a slam dunk for the industry.
- A Bloomberg New Energy Finance analyst has noted that if the credit is extended, it could lead to utilities upping efforts to limit net metering and reaping the benefits of solar expansions themselves, PV Magazine reports.
- While lawmakers still need to vote (the ITC extension is included in the omnibus spending bill), it appears the solar industry has already begun to celebrate. Solar stocks have jumped significnatly, and SunEdison founder Jigar Shah called it the "perfect deal" on Twitter.
Dive Insight:
While most of the solar industry is celebrating the news that Congress is nearing an extension of the investment tax credit, BNEF analyst Jenny Chase talked with PV Magazine about the future implications.
“My initial reaction was ten explanation marks one after the other,” Chase said. “My second thought was that if this is going to be a solar boom to end all solar booms, something else will come into solar’s way and maybe this is net metering. The result would be great for the utility sector as utilities will buy solar because it fits the load profile, but they will want to step up the net metering war.”
Chase may turn out to be prescient, but at the moment the industry is hailing the news. GTM Research predicts approval would boost installations by 54% through 2020 and create a 20 GW annual solar market. Shares of many solar companies were up sharply following word of a deal.
As proposed, the credit would remain at 30% through 2019, then decline to 26% in 2020, 22% in 2021, and finally to 10% for non-residential and third-party owned residential systems, and 0% for host-owned residential. The bill also includes a “commence construction” provision, allowing projects to come on-line by the end of 2023 and still qualify for larger credits.
"By extending the solar investment tax credit for five years with a commence construction provision and a gradual ramp down, bipartisan members in both Houses have reestablished America as the global leader in clean energy, which will boost our economy and create thousands of jobs across America," said Rhone Resch, president and CEO of the Solar Energy Industries Association.
Resch said there are currently about 200,000 solar jobs across the country, and the tax credit extension could add another 140,000. "These jobs are stable, well-paying and cannot be exported overseas," he said.