On October 3, 2008, the US House of Representatives passed legislation that extends the 30 percent federal investment tax credit for both residential and commercial solar installations for eight years. This legislation passed as part of H.R. 1424, the Emergency Economic Stabilization Act of 2008, designed to address the U.S. financial crisis. According to the Solar Energy Industries Association (SEIA), it is the most significant federal policy ever enacted for the solar industry, and President Bush vowed to sign the bill into law.
“This bill is a major step in our long journey toward energy independence and ensures that solar energy will be a significant part of America’s energy future,” said Rhone Resch, SEIA president. “This long-term extension of the solar tax credits will create a domestic solar industry, with hundreds of thousands of jobs, while providing clean, affordable, carbon-free energy to millions of American families, businesses and communities.”
“By passing this bill, Congress has finally given the solar energy industry ‘policy certainty’ that will attract investment, expand manufacturing and lower the cost of solar energy to consumers,” said Roger Efird, SEIA chairman and president of Suntech America, a solar power manufacturing company.
“By 2016, we expect solar energy to be the least expensive source of electricity for consumers,” Resch said.
The solar investment tax credit (ITC) provisions will accomplish the following:
- Extend for eight years the 30 percent tax credit for both residential and commercial solar installations
- Eliminate the $2,000 monetary cap for residential solar electric installations, creating a true 30 percent tax credit (effective for property placed in service after Dec. 31, 2008)
- Eliminate the prohibition on utilities from benefiting from the credit
- Allow Alternative Minimum Tax (AMT) filers, both businesses and individuals, to use the credit
- Authorize $800 million for clean energy bonds for renewable energy-generating facilities, including solar.
The solar tax credits were originally enacted in 2005 and have created unprecedented solar industry growth in the United States. The amount of solar electric capacity installed in 2007 was double that installed in 2006.
The extension of the credits is likely to continue that growth. According to a new economic study by Navigant Consulting Inc., the eight-year extension of the ITC will create 440,000 permanent jobs and unleash $325 billion in private investment in the solar industry. This study did not factor in elimination of $2,000 monetary cap on the residential credit, so the actual job creation and investment could be even greater.
Because solar energy components are manufactured near their markets, this extension will create manufacturing and installation jobs in all 50 states. The states that will enjoy the largest economic boost are Arizona, California, Colorado, Florida, Massachusetts, Nevada, New Jersey, New Mexico, New York, Oregon and Washington.
The same study said that because of the passage of this bill, more than 28 gigawatts of electricity will be from solar energy by 2016, enough to power more than 7 million homes. According to the SEIA, the United States then will have the largest solar power market in the world.