With U.S. president Barack Obama having confirmed fears the investment tax credit (ITC) which has helped drive the country’s solar boom will come to an end in 2017, the Solar Energy Industries Association (SEIA) has called for a rethink.
Rhone Resch, president and CEO of the U.S.’ solar energy industry body says plans to end the ITC on December 31, 2016, would hamstring the sector by driving away investors.
President Obama revealed in his budget for fiscal year 2015 on Monday, the ITC will stop at the end of 2016 leaving solar investors only the much-less-lucrative production tax credit as an incentive.
The ITC, introduced in 2006, allows solar developers to write off tax equivalent to up to 30% of the development costs of solar projects once projects come into service.
ITC helped drive 12.5 GW of solar capacity
Resch claims the introduction of the ITC has seen installed solar capacity in the U.S. rise from 680 MW to 13 GW and created 143,000 ‘good-paying’ solar jobs.
Under the terms of the PTC, introduced by the Energy Policy Act of 1992, solar developers will be able to write-off income tax equivalent to only $0.022/kWh generated by projects.
"The PTC simply can’t address the upfront costs of fuel-free solar projects, and we believe the administration’s sudden, 180-degree shift in tax policy could have devastating consequences on the future development of solar energy in America," said Resch in a press release issued by the SEIA this morning.
Fuel cell and small wind project investors will also lose out on the 30% tax redemption offered by the ITC with geothermal, microturbines and combined heat and power projects set to lose a 10% allowance under the credit, at the end of 2016.