Comments due by Mar. 1, 2015
The Federal Investment Tax Credit (ITC) is set to expire at the end of 2016 — and if it does, residential solar may be in trouble. “The ITC is the swing factor for homeowners — the plunge from 30 percent to zero will dramatically slow down sales for customer-owned systems,” opined Barry Cinnamon, CEO of Cinnamon Solar.
On top of this, many local solar rebates are declining or sunsetting altogether, leaving the ITC as one of the last remaining solar incentives. Net energy metering (NEM) — another kind of incentive — is also under fire in many utility jurisdictions as witnessed in a number of high-profile battles since 2011. (See Vote Solar’s website Our Solar Rights for more on NEM battles nationwide.)
In some ways the industry went through this loop in the solarcoaster back in in 2008, before President Bush signed into law the Emergency Economic Stabilization Act of 2008 — effectively kicking the ITC expiration can down the road until 2016. However, this time is different. With fiscal conservatives controlling both Washington and many statehouses, clean energy incentives are facing intense scrutiny.
This environment has created great uncertainty for the industry and its investor community. Industry professionals have argued for a variety of strategies, including supporting the extension of the ITC, planning appropriately for its expiration, or supporting its expiration. So what should you do?
What Can You Do? Hedge Your Bets While Supporting the Extension
At the beginning of February, President Obama unveiled a $3.99 trillion budget for 2016 that includes provisions for a permanent extension of the ITC. While unlikely to pass in the deeply divided House and Senate, the scale of this proposal suggests that the administration will support preserving the ITC.
At the very least, SEIA is calling on congress to include “Commence Construction” language for the ITC in the tax extenders package. This language allows projects to qualify for the ITC if construction begins prior to its expiration at the end of 2016. SEIA estimates that this legislation would drive 4,000 MW of solar capacity and create tens of thousands of new domestic jobs.
Solar installers across any segment — utility, industrial, commercial, or residential — should support efforts that help extend the ITC. Sign the petition today, which includes a form letter you can fill out and send to your local legislator.
As an industry, we should also hedge our bets and work to streamline our operations, fill our pipelines, and leverage as much automation as possible (via software, business model innovation, and process design) in order to lower our cost structures and place more focus on customer experience and flawless project delivery. If the ITC is extended, we can consider these steps a soft cost reduction bonus. If it's not extended, we will be closer to the cost structures necessary to sustain business at a lower volume.
Shayle Kann, Senior VP of GTM Research referred to the expiration of the Investment Tax Credit as "the cliff," which he believes will force the solar industry to essentially revert to its 2014 market levels. But even with the potential ITC “cliff” in the near future, GTM Research analysts are predicting continued growth in the residential solar sector up through boom time again in 2020.
The smallest residential installers are the ones most vulnerable to the expiration of the ITC. According to comments by Jigar Shah on Kann’s analysis, “the top 10 percent of providers will be at 3-5X the volume in 2016-17 and the other 90 percent of players will go out of business in 2017 because they are simply not able to use software and tools to become more efficient.”
Perhaps a dire prediction by Shah, but smaller installers should take heed of the spirit of his comments. Small installers need to capture best practices and lessons learned from the successful growth of the top industry players, and from mature overseas markets like Australia and Germany. Most success amongst these constituents has centered around continued focus on creating customer value through innovative financing strategies, developing lower cost customer acquisition strategies, and operations streamlining, all of which result in valuable and (hopefully) sustainable soft cost reductions.
If it’s not extended, the residential ITC (Section 25 of the tax code) goes to zero at the end of 2016. Residential solar installers need to plan their path to sustainable soft cost reductions before then so they won’t be caught surprised — pleasantly or otherwise.
Clean energy is one of the most important factors in planet Earths future. Global warming is not a fact but trends cannot be ignored, and gas emissions is the O-zone layers biggest threat. We have just begun to touch the surface of clean energy and supporting this bill should be in everyone’s interest because this is our world and we share it.
ReplyDeleteBy: Yeison Gomezzarzuela
Solar Energy is theme that should be more in our minds because of all the problems the world has i the present because of the downgrade of our resources, as we all know. Before reading this article my perspective of how important is to implement the use of solar panels and different types of solar energy, was not that high. Also, knowing that for this time one of our last resources of tools and implements of solar energy use is the ITC, governments and States should discuss the beginning of a new way to equip people and towns with solar energy tools to cut the use of natural resources down. Furthermore, in my opinion, the idea of President Obama of supporting the ITC is really important and should be in a big consideration of the line of House and Senate.
ReplyDeleteIs important to find a way to contribute with the implement of solar energy in our homes, and to put in our minds that the world is not going to give us natural resources forever. Also, the ITC, as the article says, it should began to prepare to plan their "path" so they not fall apart.
The sun is active, constantly releases the vast amounts of energy to space. It is the inexhaustible supply of energy. With the sustainable development of society and economy, and scarce energy resources nowadays, increasingly scarce energy, need to develop new energy, especially renewable green energy, including use of solar is considered as one of the renewable green energy.
ReplyDeleteThe article mentioned that whether should cancel The Federal Investment Tax Credit (ITC) or not. “In 2008, President Bush signed into law The Emergency Economic Stabilization Act of 2008.”Adopted a positive policy to develop solar energy such renewable new energy, with the support of the government,in 2009, American total solar installers following Germany, Spain and Japan. Through Investment Tax Credit, low-interest loans and other policies, can reduce the cost of services and prices of renewable energy products, can enlarge the market demand for renewable energy, promote the popularization and application of solar energy, and industrial development. If cancel the ITC, providers could not receive tax credits to help with their costs, can’t decrease costs for the manufacture, no investment tax credit, have to wait for the price of solar falling as the traditional electricity price, they will have the opportunity to use solar energy. Burn fossil fuels such as coal and oil, CO2 emissions affect the air, soil, water, forest, and seriously cause the change of climate, therefore, solar and other renewable energy are necessary to get government supporting.
In order to avoid energy crisis, the development and utilization of renewable new energy are important, the solar energy will be considered to replace traditional fossil energy in the future, it can be one of renewable green energy which provides much power to human.
The expiration of the Federal Investment Tax Credit (ITC) in 2016 would extreme impacts on residential solar installers. The good impacts would be the result in business that are able to utilize the advanced (and costly) software tools to support efficiency. Businesses that have less available resources are expected to reach such extreme levels of declining business that according to Shayle Kann, they will go completely out of business.
ReplyDeleteBecause the tax credit is unlikely to be extended, the SEIA is pushing for congress to act least include “Commence Construction” language in future tax packages.
The problems facing residential solar is highly unfortunate, considering that ITC is one of the last remaining solar incentives. Even though President Obama’s initiative to permanently extend the ITC will most likely not pass through the House and Senate, it is uplifting to know that the scale of this proposal suggests that the administration will support preserving the ITC. Even if this may just be calling on congress to include “Commence Construction” language for the ITC in the tax extenders package. In addition, driving 4,000 MW of solar capacity and creating new domestic jobs is a plus.
ReplyDeleteHowever, the people involved in this industry should not wait on the decisions of the government to act. It is important for them to act now in order to make a change. As suggested in is article, they should work to streamline operations, fill pipelines, and leverage as much automation as in order to lower cost structures and place more focus on customer experience and flawless project delivery. By doing so, whether or not the ITC is extended, the industry would still be moving towards the right direction.
Since the implementation of the ITC Federal tax credit in 2006, the annual solar installation in the U.S. grew more than 1,600 percent; a compound annual growth rate of 76% according to the Solar Energy Industries Association (SEIA). It is clear that ITC has lead to a dramatic increase in solar power, thus supporting a more sustainable future. Half of the solar market is located in California, a very environmentally friendly state and leader in solar power installations.
ReplyDeleteThe federal tax credit has contributed to much of the increase we have seen over the past 9 years of solar power installations and other solar installations, including solar hot water systems. Residents and businesses have openly adopted solar with the help of ITC. With the upcoming expiration, many believe that the tax credit might be reduced to 10%, if even that. This would cause solar businesses to reevaluate their financial packages to customers. Fortunately, many companies, such as Sonoma Clean Power are creating incentives to continue the growth of solar power installations.
I think ITC is an important remaining solar incentive but the fate of it is unfortunate. There are some efforts of Obama to extend ITC permanently but it may not pass through the Senate and the House. There are advantages of keeping it even for domestic jobs. If it expires then there will be high impacts on residential solar installers. Moreover, businesses may have less resources and many of them are affected by that negatively. This situation should be evaluated in detail and the government is required to act accordingly when it comes to economic conditions as well.
ReplyDeleteI think people who act in this industry should do something to react. The act of government should not be waited and the change can be made altogether. The article also suggest the together work cycle to decrease cost structures. The industry can evolve by that way and it should be seen by industry people as well.
Solar energy is definitely a big part of obtaining necessity energy in the future. It may already play a big role in many towns, cities and farms but solar energy is not yet perfected as it's known that the storage of the power obtained is a major issue. Batteries do not last forever and they harm our environment with the chemicals used to make them.
ReplyDeleteThe installment of Solar energy panels should be supported by all because it progresses our Green Economy as well as providing more jobs. The ITC is a 30 percent tax credit for solar systems on residential and commercial properties which has persuaded companies and citizens to install solar panels, the number of solar panel installations will plummet once the ITC expires.
The expiration of the Federal Investment Tax Credit (ITC) in 2016 would have many negative effects on people who are interested in smaller, but some positive effects on bigger businesses. Positive impacts include: business that are able to utilize the advanced but expensive software tools to support efficiency. Businesses that have less available resources are expected to reach such extreme levels of declining business that according to Shayle Kann, they will go completely out of business.
ReplyDeleteThe government needs to be doing everything it can to make sure that consumers can get solar devices as cheap as possible, and that bigger businesses can access these products at discounts, as incentive to switch to clean solar energy.
Its nice to see that the industry is putting in motion plans to lower their price structure incase the tax incentive expires at the end of the year. In doing so, they are prepared for lower volumes on the market place, allowing the industry to sustain themselves. These types of decisions are incredibly important in the green economy, as the United States needs to maintain competitiveness with other nations in developing sustainable energy. I fundamentally disagree with anyone who believes we should allow the last solar incentive to expire - the US solar industry is already years behind other nations such as China and Germany. We want our citizens to be buying and using these solar panels, effectively lowering price to use this technology as a source of electricity. This seems common sense, but with the divide in our legislation, the extension of this tax credit may not happen. Our voice as the public must be heard in these issues, to put pressure our representatives.
ReplyDelete- Dylan Hirsch
After having read this article, I cannot fully comprehend why President Bush agreed to terminate the Federal Investment Tax Credit (“ITC”). Why the need to place an expiration date on a long term project which has the potential of providing energy efficient solutions to our environment? I find that in reaching goals deadlines are crucial in measuring progress, but the elimination of such an effective incentive is unwise. President Obama now faces a $3.99 trillion budget that may not pass due to the political division that has always existed in the Senate. Of course, if it fails approval, then solar panel manufacturing industries and small scale businesses can ultimately go bankrupt and disappear. In conducting research, I have discovered that the manufacturing of solar panels is quite costly due to the silicone cells injected in the solar panels. However, the silicone cells, though a natural resource, are not abundantly available in the environment.
ReplyDeleteSolar panels are everywhere in New York and New Jersey. To the best of my knowledge, I know these panels generate electricity from sunlight and don’t release carbon dioxide emissions. Our government should work in favor of the budget so that solar energy sustainability may remain, not only in urban developed areas, but also introduce solar energy in other undeveloped regions. This is a topic I look forward to further exploring in my research paper. Solar energy might be an important contribution and the fundamental answer to the future growth of impoverished countries.
The Federal Investment Tax Credit (ITC) is one of the most important federal policies that help the development of solar energy. It give this developed more motivation and I do not believe that the ITC should be terminated soon. This is another step toward green economy. Motivation is needed for the businesses and consumer so the necessity of solar energy can be taken seriously. This is one of the best ways to eliminate pollution and reduce the increased effects of global warming. At the same time, consumers and businesses should put in their own hard work and motivation for the general welfare and community.
ReplyDeleteBy giving tax credit, the government is implementing incentives for those who make the switch to solar energy. It is helping people move in the direction of a greener environment and economy. When it expires, it will most likely have a negative effect on those who have invested in solar energy and for those who were thinking of investing in it. It is important to keep in mind that this tax credit doesn't only just apply to business but also residential properties as well. People can benefit from having solar panels installed in their homes and offices which increases the amount of solar equipment sold. Therefore investing the revenue from these sales into the greener technology.
ReplyDeleteIt doesn't make sense to get rid of the tax credit that was implemented to support the utilization of solar technology. It is extremely expensive to purchase and install solar panels, it is not a cost effective source of energy. Therefore the tax credit is important to ensure that people can still afford and embrace the ideas of greener technologies. People aren't going to spend more money if it won't benefit them in some way, unfortunately its not enough anymore to just want to make a greener economy and environment.
It’s unfortunate that in 2016 the expiration of the Federal Investment Tax Credit (ITC) will come into full effect. This will have extreme impact on residential and commercial solar installers. In another article I read Seia online, and they state the multiple-year extension of residential and commercial solar ITC HAS helped annual social installation grow by over 1,600 percent since the ITC was implemented in 2006 – a compound annual growth rate of 76 percent. Both the commercial and residential ITC are credits equal to 30 percent of the basis that is invested in eligible property. After 2016 commercial credit will drop to 10 percent and residential credit will drop to zero. This is hard to grasp because Solar ITC is important because renewable energy creates economic growth, job increase and lowers energy bills.
ReplyDeleteThe ITC is an important federal policy that supports the use of solar energy in the United States. It continues to provide jobs across the country as states introduce more solar energy usage in the utility, industrial, commercial and residential segments. The residential solar is in danger due to the expiring Federal Investment Tax Credit in 2016. It is important for the United States to continue renewable energy innovations to compete with foreign countries. It also lowers energy consumption and reduces pollution. Today, clean energy incentives are being questioned as to whether or not they are worth it. I think this is very disappointing because we need to take care of the planet to ensure it is sustainable. I believe that using solar energy rather than conventional energy is beneficial and that the ITC should continue passed its 2016 deadline. There is little global warming emissions and improved public health and environment quality as a result of renewable energy incentives.
ReplyDeleteThe fact that the Federal investment tax credit is set to expire in 2016 will withhold the development process of solar energy. If we were a more energy efficient, we would have a more “green economic” environment, which would benefit us as a whole because we would be using solar energy. Solar panels have become popular in energy efficient cities and new inventions would not be supported without the ITC. Even though the proposed act by Obama may not pass, they set a minimum of “commence construction” which even has its own limitations. If more individuals and businesses developed a need for solar technology and realized its significance, the ITC would have found a way to renew its investment tax credit.
ReplyDeletePolicymakers could boost domestic manufacturer competitiveness through “Made in America” local sourcing rules.
ReplyDeleteAmerica’s solar industry still needs an ITC, at least today, but we must empower developers to be competitive without subsidies. It won’t happen overnight, but smart policy steps and a predictable wind-down process will complement industry trends to prevent volatile market contractions. So let’s push for a smooth end to the ITC as our solar industry diversifies and becomes more efficient, creating a situation in which American solar stands on its own, without federal subsidies.
The ITC is the swing factor for homeowners — the plunge from 30 percent to zero will dramatically slow down sales for customer-owned systems,” opined Barry Cinnamon, CEO of Cinnamon Solar. Solar Federal Tax Credit
ReplyDeletewill dramatically slow down sales for customer-owned systems,” opined Barry Cinnamon, CEO of Cinnamon Solar. solar tax credit
ReplyDelete