Extension of the Federal Income Tax Credit: A historic decision for solar - by Ken Driscoll

Ken Driscoll, Solect
Energy

The solar industry achieved a critical milestone recently. On Friday, December 18 Congress passed the extension of the Federal Income Tax Credit (ITC), which awards a 30% tax credit towards the purchase of renewable energy systems, including solar photovoltaics (PV).  This move by Congress extended the ITC an additional five years with a clear path for “safe harboring” projects and providing certainty for the industry and solar adopters.

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 settles 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 a viable clean energy source, but it also further positions the United States as a leader in renewable energy, supporting substantial industry job growth here in Massachusetts, as well as 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.

The Federal ITC extension is a positive step forward, but 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 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 get addressed, every indication we have points to a change in Massachusetts state incentives in the coming years.  However, for now, Massachusetts solar incentives are 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.

Ken Driscoll is founding principal and CEO of Solect Energy, Hopkinton, Mass.