A critical tax incentive for wind and solar power was renewed this past Friday December 18, 2015 by the House and Senate. This represents a significant boon to the renewable energy industry.
The 30 percent solar investment tax credit was set to expire by the end of 2016. Had this timeline not changed, the solar industry would have slowed considerably following 2016. This is not to say that solar is not affordable without subsidies. Quite the opposite is true. The point here is that the industry needed a few more years to mature and the tax credit is a key component of maintaining growth and stability until that time.
Now those that are looking to invest in cost effective solar power can continue to save even more with the tax credit through 2020. The tax credit will drop down to 10 percent from 2021 through 2022.
This decision was a part of a $1.15 trillion spending bill to keep the government running until September of 2016. The compromise that was made for the tax credit extension was the lifting of the ban on U.S. crude oil exports.
Many industry insiders now predict considerable future growth for solar. This means more than 220,000 new jobs (50,000 of which will be veterans) and an additional $133 billion in investments according to the Solar Energy Industries Association.*
It is also forecast that solar power will be providing the United States with 3.5 percent of the energy that it needs by 2020. The 100 gigawatt in solar capacity will power 20 million homes. While 3.5 percent may not sound like much, what’s notable is that this is three times as much as what’s currently installed. If solar deployment were to continue at this pace, it would soon become a majority of energy produced in America.
There’s still much debate about solar energy versus fossil fuel subsidies. Renewables do get significant subsidies. There’s no doubt about it. Fossil fuels have also received tremendous amounts of money. In fact, since 1918, the oil and gas industries benefited from $446.96 billion.** The one, and very important, consideration that does not typically get accounted for in comparing subsidies and overall energy costs is that of pollution. The continued subsidizing of fossil fuels definitely does not make sense in light of the considerable environmental and societal health damage done by this source of energy.
The tax credit renewal will also be vital in helping states meet their mandated Clean Power Plan renewable energy goals. Commercial and residential solar installs will certainly help contribute to overall production goals.
This renewal decision also coincides with the historic agreement at the recent 21st Conference of the Parties in Paris. Almost 200 of the world’s largest countries now have a basic framework and understanding that we must begin our transition to clean energy.
We need everything we can get to help us continue on our path to an environmentally stable and more sustainable world. This tax credit will certainly do much in the way of meeting this goal.