Huge milestone for the solar industry today! A bipartisan agreement was reached by Congressional leaders on the $1.1 trillion omnibus spending bill that includes the extension of the Federal Solar Investment Tax Credit (ITC) for residential and commercial projects.
Last night, it appeared that neither party in the US House of Representatives may have enough votes to pass the bill, fortunately last minute lobbying efforts by leadership secured far more than the needed votes. The House passed the bill with a final vote was 316-113.
The Senate followed suit, passing both the agreements, with a 65 to 33 vote. President Obama signed the spending bill before he left for vacation Friday afternoon.
The Federal Investment Tax Credit (ITC) was set to drop to 0% on December 31, 2016, for residential solar installations (and drop to 10% for commercial solar). Without the tax credit, analysts had predicted a significant decline in solar in 2017… now with the ITC extension, analysts see an increase to the amount of solar installed in the United States through 2020.
The impact of the ITC extension for residential and commercial solar will be as follows:
| Tax Credit | Date Timeframes |
30% |
Extension of the ITC through December 31, 2019 |
26% |
ITC: January 1 – December 31, 2020 |
22% |
ITC: January 1 – December 31, 2021 |
10% |
ITC January 1, 2022 and forward for Commercial Projects
(0% for Residential Projects) |
Another victory is that at the end of each year when the ITC percentage steps down, a Commence Construction clause now applies. This means that projects that qualify for the ITC and have begun construction on the project prior to the step down date, can still apply for the higher percentage credit. Current verbiage indicates that the system must be “producing” to apply for the tax credit, meaning the installation must be complete including interconnectivity to the public utility.