We have history to teach us that 2019 will see a rush to install solar energy systems. Homeowners and businesses that wait too long may find it difficult to get a project completed in time and potentially lose thousands of dollars from incentives. Here’s why:
The most important federal renewable energy program is the Investment Tax Credit (ITC) for solar energy installations. For any project fully installed before the end of 2019, the ITC will allow property and business owners to deduct 30% of their total investment from their income tax obligations that year. Starting day one in 2020, new project owners will be allowed only a 26% deduction. It decreases further in 2021.
The 4% ITC reduction is significant. For commercial installations it could translate to tens of thousands of dollars. But even to the average homeowner, by waiting until after 2019 to go solar you may be giving up tax savings equivalent to months of power bills. Such savings would be in your pocket within a year or two after installation.
This decreasing incentive creates a situation similar to the one we saw in 2016 when, with no Congressional action, the ITC was due to completely expire at the end of the year. Homeowners and business owners raced to get systems installed before the tax credit disappeared. This created a historic spike in activities. In places it caused hardware capacity and supply issues along with huge cost fluctuations. In some cases, it was difficult for businesses and homeowners to find installers with open schedules even just midway through 2016.
Jump forward to 2019, and we anticipate experiencing something similar. We already see signs that the local market is heating up, with our own 2018 installation calendar already full through the end of this year.
Thus, there are many reasons to act early in 2019.
First, a rush to complete solar energy installations will be complicated by an already growing number of projects. Most Pennsylvania authorities see greater requests for licensing and permits. That makes it more likely that many local permitting offices will become backlogged, thereby slowing down the pre-installation process.
Second, import tariffs and increased demand may cause panel and other component prices to increase, raising system prices along with them, and adversely affecting ROI.
Next and just as important, a solar energy system installed before the spring maximizes your first year savings, while locking in the best ITC of 30% .
At Exact Solar, we stress the importance of investigating your options as early as possible. You will have time on your side to choose your best path to savings, make the critical end of 2019 deadline and lock in your 30% tax credit.
To get more information and background, see our full article, “2019 To Be a Busy Year for Solar“.