With all the focus on the Bailout, I must admit thinking the Renewable Energy ITC extensions would have to wait until next year. After the U.S. Senate passed a revised bill laden with tax extensions and other unrelated legislation, the U.S. House of Representatives passed the “Rescue Sweetened With Tax Incentives” (by Cecilia Kang of the Washington Post).
Per “Federal Solar Tax Credits Extended for 8 Years, US Poised to Become Largest Solar Market in the World” from the SEIA (Solar Energy Industries Association), the solar investment tax credit (ITC) provisions will:
- Extend for 8 years the 30-percent tax credit for both residential and commercial solar installations;
- Eliminate the $2,000 monetary cap for residential solar electric installations, creating a true 30-percent tax credit (effective for property placed in service after December 31, 2008);
- Eliminate the prohibition on utilities from benefiting from the credit;
- Allow Alternative Minimum Tax (AMT) filers, both businesses and individuals, to take the credit;
- Authorize $800 million for clean energy bonds for renewable energy generating facilities, including solar.
Or review the 451 page H.R. 1424 Emergency Economic Stabilization Act of 2008 for yourself; DIVISION B—ENERGY IMPROVEMENT AND EXTENSION ACT OF 2008 volumes across pages 113 to 261.
While the elimination of the $2000 cap on residential photovoltaic installations is a fantastic boost for distributed generation, wealthier families with higher annual electricity consumption will be the first to benefit. As a solar integrator pointed out to me today, the residential market will be frozen in the United States until the residential Solar ITC becomes effective January 1, 2009.
The Solar Electric Power Association (SEPA) was also quick on the press release with the “SEPA Statement on Historic 8-Year Solar Tax Credit Extension”. Hailing “the removal of a prohibition that previously prevented electric utilities from taking advantage of the credit”, this significant change to the Solar ITC has received little scrutiny. Are monopolistic Electric Utilities poised to become change agents to stave off global warming by investing in large scale renewable energy, solar, and photovoltaic power plants? Will they play fair with independent renewable energy power producers connecting to their grids? Why were no concessions sought from Utilities? How about Utilities agreeing to new photovoltaic residential metering rules that pay for excess electricity generation (please see AB 1920: California bill goes beyond Net Metering) in exchange for receiving the benefit of the ITC?
I am hoping the passage of the Solar ITC will place a natural limit on discussions about ITC politics at Solar Power International 2008 next week in San Diego, California USA. Wishful thinking? As last year, I believe the US and worldwide economy should be the prime topic of conversation. The credit crunch may slow down utility renewable energy investments and have already impacted production expansions in the photovoltaic industry. On the residential front, will families invest in solar electric power even when they have opted not to purchase new cars?
Last year at Solar Power 2007, I wrote about the R-Word (Solar Power 2007: Discussion Panels Aplenty – Part 3). Will the D-Word dominate discussions this year trumping the new ITC? And now that oil has corrected, the Recession Risk and Solar Stocks, Oil, and Gold portions of my Photovoltaics: 2007 Post Review and 2008 Trends to Watch – Part 2 post are panning out.