Obama seeks to extend ITC permanently

President Obama, in presenting his proposed Federal Budget has proposed that the solar Investment Tax Credit (ITC) be extended permanently in the 2016 budget.

Under the new budget, there would be funding of $7.4bn for clean energy alongside $4bn for states to accelerate their carbon reduction plans. Previously, the ITC had been scheduled to drop from 30% to 10% at the end of 2016. This has now been rescinded.

The ITC, which was introduced in 2006, has allowed solar developers to write off tax equivalent to up to 30% of the development costs of solar projects once projects come into service.

Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA), told pv magazine that the extension would be "a major investment in America’s future".

He added: “The ITC has changed America for the better. The solar industry employs nearly 175,000 Americans, pumps $15 billion a year into our economy and offsets more than 20 million metric tons of damaging carbon emissions into the air. In the past four years, employment in the solar industry has increased by more than 85 percent – and last year alone, we created one out of every 78 new jobs in America. This remarkable progress is due, in large part, to smart, effective public policies like the solar ITC.”

He continued: “We applaud President Obama’s proposal to make the solar ITC a permanent part of our nation’s tax policy. Without question, it sends a strong signal to America’s solar markets, while charting the course toward an even stronger clean energy future.”

Ten months ago, SEIA released a statement outlining its concerns over the ITC’s then-deadline of the end of 2016. Speaking then, Rhone Resch, president and CEO of the body, said that the introduction of the ITC had seen installed solar capacity in the U.S. rise from 680 MW to 13 GW, and had created 143 000 well-paying roles. The reduction of such a bonus, Rhone said, could have ‘devastating consequences on the future development of solar energy in America’.

In addition to an extension of the ITC, the budget also extended permanently the production tax credit linked to the wind industry.

One Reuters report quoted an anonymous source who said that both budgets could be used primarily to fund programs at the Department of Energy and the Department of Defense. The $7.4bn allocation is a major increase over the $6.9bn of last year’s budget and the $6.5bn of the year before that.

Budget calls for 45% boost in solar funding

Obama’s budget includes a nearly 45% boost in funding for the federal government’s solar energy technologies program within the DOE’s Office of Energy Efficiency and Renewable Energy.

Overall, the budget request of $336.7 million for the solar program compares to $233 million in 2015 and approximately $257.1 million in 2014.

The budget proposal, which must be approved by Congress, includes a $26.7 million jump in funding for photovoltaic R&D next year to $62 million. That compares to $35.3 million in 2015 and $56 million in 2014.

The request also includes an additional $26.6 million for balance-of-systems cost reduction to $67.3 million in 2016 compared to 2015, and an increase of $15.6 million for innovations in manufacturing to $73.4 million.

Concentrating solar power would receive only $2 million more in 2016 at $48.4 million compared to 2015.

In an interview with pv magazine, Minh Le, director of the DOE’s SunShot Initiative, called the proposed solar program increase "healthy."

The funding increase comes as the US solar installations are reaching record highs and amid a revival in US solar manufacturing, he added.

“I think there is a great deal of recovery in the manufacturing space,” said Le, pointing to several current domestic manufacturing expansions by companies such as Suniva, Sivelo and SolarWorld – all of which have leveraged federal funding.

Last week, the DOE’s Sunshot initiative announced a new $45 million funding opportunity to support US solar manufacturing innovation and scale-up.

The original version of this article ran under the headline Obama extends ITC permanently. It was changed on Feb 5, 2015, to more accurately represent the budget process.