Exact Solar could not have asked for a better holiday gift. On December 18, Congress passed the $1.1 trillion omnibus bill, which included an extension of the Investment Tax Credit (ITC) for solar energy projects.
The solar ITC was originally scheduled to drop down to 10 percent for commercial, and zero for residential projects, at the end of 2016. Only systems that were completed and functioning by the end of 2016 would have been eligible for the 30% credit. This was expected to cause a huge rush to go solar, causing delays in the processing of permits and paperwork across the country. Exact Solar has already seen an influx of applications that are causing delays in New Jersey. We are glad that we narrowly avoided an extremely hectic year, and are enthusiastic about the growth that will come in the future!
The solar ITC will remain at 30 percent, for both residential and commercial projects, for the next three years. Afterwards, it will gradually decrease, and eventually provide a 10 percent credit for only commercial projects in 2022.
Here is how the solar ITC will decrease in the future:
2017: 30 percent
2018: 30 percent
2019: 30 percent
2020: 26 percent
2021: 22 percent
2022+: permanent 10 percent for commercial projects and third-party owned projects
Prior to the passing of this legislation, the installation of a solar energy system must have been completed before the ITC could be claimed. Now, installations must only have begun by the end of
The extension of the solar ITC combined with decreasing installation costs and increasing panel efficiency suggests a bright future for the U.S. solar industry. GTM research predicts that the extension will “result in 25 gigawatts (GW) of additional solar capacity over the next five years — a 54 percent increase over a no-extension scenario.” But these numbers are hard for most people to wrap their heads around. Check out this awesome graphic from SEIA that puts the growth into perspective:
The extension of the solar ITC was a pleasant surprise, and we look forward to helping more Pennsylvania and New Jersey residents and business owners harness the power of the sun in the coming years! We wish you and your family a very happy holiday season, and a wonderful New Year!