Late in 2020, a $US2.4 trillion spending bill and COVID stimulus package passed the U.S. House and Senate. Days before the year’s end, the president signed the bill into law. The stimulus includes vital and overdue changes to clean energy incentives.
At Exact Solar, we see the most encouraging part to be the extension of the solar Investment Tax Credit (ITC) at its current level of 26%. Created over a decade ago as a 30% credit, it has been the most important driver for the current solar revolution. By some calculations, the installed solar capacity has grown by 10,000% since the inception of the ITC.
This latest two-year extension effectively pushes forward the end of the ITC through 2023 and maintains the 2020 credit level (26%) through year-end 2022.
What the Extension Means for Homeowners
Prior to this modification to the ITC, homeowners going solar in 2021 were eligible for a 22% tax credit. This additional 4% now allowed will mean more money saved, and it’s not just peanuts! For the typical sized residential solar energy system in Pennsylvania and New Jersey, the additional 4% credit spread across one or more federal tax returns means a homeowner can additionally save around $1,000, or even more.
Still More Good News for the Environment
The ITC changes can now also be applied to other clean energy investments beyond solar power. For example, environmentally beneficial new fuel cells are allowed. Fuel Cells are like a battery in that they chemically convert compounds into electrical energy. Unlike the emission-generating combustion of fuels such as in natural gas fired power plants, fuel cells convert similar fuels into water and hydrogen as a byproduct when producing electricity.
The ITC is now also available for investments in waste heat energy recovery systems and properties. This encourages power generation using exhaust heat that would otherwise be wasted from buildings or equipment, heating local areas.
Like most legislation, there are a few compromises and adders injected for key constituents.
For example, the new law will also stimulate increasing the use of carbon capture, an important way to reduce the harmful impacts of current processes until such time as they can be eliminated.
Not everything is fully green, either, as the new policy allows credits for coal mined on tribal lands to be increased and extended. It will also extend credits applied to production of biofuels.
Exact Solar actively participates in local and national organizations watching and influencing policies. We encourage you to check our pages in the future to say informed on clean energy matters that impact cost and savings and ultimately protect our future.