In our article for the Yardley Voice, Next Year Will Be Busy for Solar, we advise Pennsylvania and New Jersey homeowners considering a solar energy system for their home to start the process as early as possible in 2019. The planned reduction in the Investment Tax Credit (ITC) for renewable energy investments creates this urgency. Beginning the first day of 2020, the tax deduction drops from 30% to 26%, with more scheduled reductions in the following 2 years. For both large and small projects, this will cause a predictable rush to meet deadlines and maximize deductions.
The U.S. Congress intended these changes to be a signal to the market to stimulate quick responses at all levels. In fact, since the announcement in December of 2015, the U.S. solar energy market has expanded strongly, with everyone taking advantage of tax credits before the scheduled deadlines.
Looking first at the commercial and utility projects, the program targeted both solar energy and wind energy. However, as you can see from the illustration, the ITC for wind projects ends soon. As a result, large scale wind energy installations have been booming recently, while solar energy has also seen steady growth. But, in 2019 the U.S. utility focus can be expected to shift strongly to solar power.
What This Means for Rooftop Solar Energy
Within the U.S., most analysts predict moderate growth for 2019 compared to 2018. Utility scale projects will play a big role. Competition for solar energy hardware almost always means the largest projects will lock down capacity before the start of construction, sometimes very far in advance. This can create delays for smaller projects, especially residential solar.
As the next illustration shows — The ITC reduction for residential solar projects also begins the first day of 2020. However, unlike for commercial and utility projects, it will be eliminated by the end of 2022. The subsequent reductions of 4% in 2020, another 4% in 2021, and a full 12% in 2022 make installing a solar energy system on your rooftop in 2019 an even better value. Losing those tax credits will be the equivalent of months of utility expenses.
The impending ITC changes will create new urgency across the board, from large solar farms to the smallest rooftop installation.
The combination of federal policy changes and U.S. market responses are just one indicator. Most analysts also see a strong global market, where solar energy installations in 2019 will exceed those in 2018. So worldwide, an already busy market will get busier.
Global Indicators for the 2019 Solar Energy Market
The solar power market is global, and solar panels and associated hardware for your home’s rooftop are essentially the same as those for the largest PV utility scale projects. Local prices and availability depend on worldwide demand and activity. That means the combination of federal policy, utility responses, and global activity lead many to predict that solar energy installations in 2019 will exceed those in 2018. So, an already busy market will get busier.
Start Early in 2019
The combination of the certainty of the ITC reduction and the uncertainty about the global solar power market in 2019 leads Exact Solar to strongly recommend Pennsylvania and New Jersey homeowners start their inquiries as soon as it possible. Your ultimate goal is to make sure a project can be finished in time to take advantage of the full 30% federal tax credit. But keep in mind that your best financial result will come from getting maximum savings throughout the spring and summer of 2019. You will still have the full benefit of the maximum tax break.
The sooner you produce your own solar power in 2019, the more money you will put in your pocket during the year and for years to come!