As you may have heard, the solar industry achieved a critical milestone last week. On Friday, December 18th, Congress passed the extension of the Federal Income Tax Credit (ITC) as a part of an omnibus tax package. The ITC, a critical renewable energy incentive, awards a 30% tax credit towards the purchase of solar renewable energy systems, including solar photovoltaics (PV). This move by Congress extended the ITC an additional five years at a declining rate with a clear path for “safe harboring” projects and providing certainty for the industry and solar adopters.
Understanding the Extension
Under the new congressional extension, the ITC will remain active at current levels for three more years, until the end of 2019. It will subsequently decline incrementally, allowing the industry to adjust to lower incentives over a three-year period, until it remains permanently at 10% starting in 2022. This incremental ramp-down should allow the solar industry mature with the market, as the rates echo similar declines in solar costs.
The extension of the ITC marks a historic day for the solar industry. Not only does this decision reinforce the strength of solar and wind technology as viable clean energy sources, it also further positions the United States as a leader in renewable energy, supporting substantial industry job growth here in Massachusetts and throughout the country. The extension of the ITC also strengthens the industry’s ability to reach grid parity by 2022, making it no longer dependent upon federal incentives.
We are still working
While the Federal ITC extension is a positive step forward, we still have work to do locally to lift the net metering caps in Massachusetts in order to reach our targeted goals. Massachusetts is at a pivotal point with our renewable energy and solar policy legislation. We are optimistic that Massachusetts’ leaders will follow suit with the federal government in order for our state to remain a leader in renewable energy, and to support businesses, municipalities, and not-for-profit entities in addressing their growing energy needs with clean, affordable, solar energy. Solect has been actively working with our representatives to help them understand the importance of both federal and state policies, and we stand ready to communicate the benefits resulting from these new policies.
While we are confident that the net metering cap will ultimately be addressed, every indication we have points to a change in Massachusetts state incentives in the coming years; like the gradual reduction of the ITC, state incentives should serve to help a newer industry successfully mature into the market, and then phase out. For now however, Massachusetts solar incentives remain at a peak. For this reason, we encourage those who are interested in going solar to do so without delay in order to benefit from the progressive policies that have made the Commonwealth a leader in renewable energy.
As always, we are glad to be a trusted solar advisor for our customers in the Northeast. We look forward to working with you to optimize your investment in solar energy!