The US Congress on Tuesday approved an additional five years for the solar-power investment tax credit (ITC), which is scheduled to end at the end of next year. It also provided a five-year retroactive extension of the production tax credit (PTC), which benefits wind-power developers and expired at the end of last year.
Extending the ITC has been one of the solar industry’s top lobbying goals this year and uncertainty over its future has been a drag on development. Solar companies got an additional boost from California, where regulators proposed upholding policies that promote the use of rooftop panels, erasing another big question mark.
“The holidays have come early for the solar sector,” Jeffrey Osborne, an analyst at Cowen & Co, said in a research note on Wednesday.
Both the tax-credit extension and California’s proposed decision would help attract new investment and carry the industry until solar can compete without subsidies, Osborne said.
“The two issues have been an overhang on the space for several quarters,” he said.
In Washington, the Congress agreed to let the ITC run through the end of 2021 as part of a broader budget deal. The credit would apply to projects that begin construction in that period instead of the current policy that applies to power plants that go into service before the deadline. It currently pays 30 percent of costs, and is set to gradually decrease.
The PTC used primarily by the wind industry pays US$0.023 per kilowatt-hour of electricity generated. It is set to be gradually decreased over the next four years and phased out completely in 2020.
The tax credit extension is expected to spur more than US$125 billion in new investments for the US economy, Solar Energy Industry Association chief executive officer Rhone Resch said.
“Members in both Houses have re-established America as the global leader in clean energy,” Resch said in an e-mailed statement.
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