Thoughts on Solar

At Run on Sun we don’t take partisan stances on politics. We believe everyone, regardless of politics, benefits from harnessing the unlimited resource of sun-powered PV systems. However, the recent election has raised questions about the future of federally-backed support for solar - specifically the federal solar investment tax credit (ITC). The short answer is, we are optimistic the current plan for the ITC to continue for three years at 30% then gradually sunset after five will be unaffected. Here’s why:

1. The ITC is federal law. The President cannot change federal law by executive order without an act of Congress to change it.
2. Congressional acts require 60 votes in the Senate. Policy decisions in Congress such as changing a tax law, require enough votes to overcome a filibuster. The post-election makeup of Congress would require bi-partisan support to pass any changes to the ITC. 
3. Solar is good for the economy. The solar industry has proven to create local, living-wage jobs that cannot be exported. Everyone knows job-creation receives bi-partisan support.
4. Solar has already received bi-partisan support. Leaders see solar not only as an environmental solution but an economic one, as well as an avenue for fuel independence. These reasons and more helped get the ITC extended last year by champions on both sides of the aisle.
5. State and local policies will prevail. Regardless of what happens at the federal level we can count on state and local policy to continue to support a thriving solar industry in California and many other states where the benefits are undeniable.

The fact is, the ITC is federal law and laws are not easily changed. Even if it did somehow manage to be changed before the 5-year planned sunset, we are confident our state will step up to make sure adequate support continues to make solar an economically viable option for the public. Never fear! Solar is here to stay. 

(Thank you to CALSEIA and Executive Director Bernadette del Chiaro for the inspiration for this blog and for their invaluable efforts to advocate on behalf of the solar industry.)

Today is a great day for solar! The uncertainty around the ITC (federal solar tax credit) is finally over and we can all rest assured that the solar industry will not fall off a cliff come December 31, 2016! 

You may have heard the big news about the bipartisan passing of the year-end budget deal to effectively not shut down the government for one more year. But you may have missed the news that they also passed a 1.1 trillion dollar omnibus spending bill including the extension of many tax credits. Guess which exciting tax credit was included?? That’s right, the solar ITC and other renewable energy tax credits were included in HR 2029. The spending bill is the result of a deal between party leaders. The unfortunate cost of the five-year extension (and other Democratic priorities) is the lifting of the 40-year-old oil export ban and a series of permanent tax cuts. 

This morning HR 2029 passed the US House of Representatives (316-113) and the US Senate (65-33). This means that the Omnibus funding bill goes to the President for his final signature, which he has already agreed to do. This is a great day for the solar industry, living-wage American jobs, the growth of clean power and all the policy advocates out there fighting to extend the ITC. 

Here are the details regarding the new extension of the solar tax credit:

• 3 year extension of the ITC at 30% extending until December 31, 2019
• Step down to 26% in year ending December 31, 2020
• Step down to 22% for year ending December 31, 2021 
• Each year that a step down occurs has a start construction clause 
• Continued 10% ITC for each year after…indefinitely? 

“We commend members of Congress in both parties for taking this bold step and we look forward to delivering on the promise that this policy now offers all Americans. Thanks to the ITC, solar energy will add 220,000 new jobs by 2020, and with this extension, the solar industry can achieve its pledge of employing 50,000 veterans. Clean solar energy will cut emissions by 100 million metric tons and replace dozens of dirty power plants.

Importantly, in the follow up to the Paris accord, this establishes the United States as a model for the reduction of greenhouse gases. A five-year extension of the ITC will lead to more than $133 billion in new, private sector investment in the U.S. economy by 2020. And much of this growth will come from small businesses, which make up more than 85% of America’s 8,000 solar companies.

Solar power in this nation will more than triple by 2020, hitting 100 GW. That’s enough to power 20 million homes and represents 3.5% of U.S. electricity generation.”

Today we celebrate the progress our country  has made. We know the tax extension will only serve to help more and more property owners take advantage of all the benefits of solar energy. Happy Friday and Happy Holidays everyone!!

One of the chief economic benefits of going solar is the 30% Investment Tax Credit (the “ITC"), but it is scheduled to go away at the end of next year.  Here is what you need to know now if you hope to save yourself some serious coin on your solar system.

There are three economic benefits from going solar: rebates from the utility, savings on your utility bill, and the ITC.  For clients in the Run on Sun service area, only PWP and LADWP are presently offering rebates (sorry SCE folks) but at 40¢ and 30¢ per AC Watt installed, these rebates top out at roughly 10% of your cost.  Monthly savings from solar will vary depending on how big a user you are and what rate structure you are under.  Typically, SCE customers save more with solar because their rates are that much higher.

But the one dominant factor that has helped to make solar more affordable, particularly as rebates have gone away, is the ITC.  A true tax credit (as opposed to an income deduction), the ITC is valued at 30% of the total cost of the system (less any rebate that might have been available).  For example, a 5 kW solar system in SCE territory that costs $4.00/Watt will see $1.20/Watt coming back as a credit on the system owner’s taxes.  (Oh, yeah, you have to own the system to capture the ITC - part of our #1 Reason to avoid a Solar Lease!)  That’s a $6,000 credit - pretty sweet!  And commercial clients not only get the ITC, they also get accelerated depreciation, making the tax advantages of solar even more attractive.

And yet, unless Congress acts (and really, does anyone have confidence in the ability of this Congress to do much of anything?), this will all end come December 31, 2016. (Ok, small caveat - commercial projects will continue to get 10%, but for residential clients it will be nada, nothing, zilch.)

I can hear you already saying, come on, that’s over a year away - why are you raising this issue now?  Well aside from the old warning: “Caution - dates on the calendar are closer than they appear!” – it is important to understand what is likely to happen next year.  Every solar company out there will start advertising about the need to “act now” only this time they will be right.  As more and more people realize that they are about to leave a whole bunch of money on the table, the crush to get projects in the pipeline and completed before the deadline will mean more demands on already understaffed city building departments (many of whom routinely take six weeks or more now to approve even the simplest solar project), inspectors, and utility staff to process an unprecedented flood of applications.

As we move through next Spring, many solar companies will already be booked so completely that homeowners who are just waking up to the problem, might find themselves in a pipeline with no guarantee that their project will be completed in time to qualify for the ITC.

So what to do?

Well, for the good of the solar industry as a whole you should contact your Member of Congress and urge him/her to support the extension of the ITC.  If you have friends and family who live in more conservative areas, be sure to urge them to do the same.

But as for your own solar project, the time to get started is now!   Don’t be the sad-sack who gets shut out of affordable solar because they waited too long.