U.S. IRS allows community solar owner to access the ITC

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A non-profit coalition and law firm specializing in clean energy have challenged the Internal Revenue Service (IRS) to clarify whether or not owners of solar panels in shared “community solar” projects can access the U.S. federal investment tax credit (ITC), and the result looks good for solar.

In a Private Letter Ruling requested by Foley Hoag LLP and Clean Energy States Alliance (CESA), the IRS has stated that an owner of solar panels in a 150 kW community solar array in Vermont can claim the credit. And while the organizations clarify that the ruling received is only applicable to that taxpayer, they also say that it is a start.

"This new Private Letter Ruling represents the first instance in which the IRS has publicly weighed in on the applicability of the residential ITC to an owner of solar panels in a shared, offsite array," said CESA Executive Director Warren Leon. "The ruling suggests that the IRS may be receptive to claims for the residential ITC when a project mirrors the structure used in this case."

The ruling was also praised by Solar Energy Industries Association (SEIA).

GTM Research has predicted that the community solar market in the United States will reach 500 MW annually by 2020 from only 21 MW last year, representing a 59% annual growth rate. However, the ITC is not expected to play a major role in this market growth. Unless it is extended, the ITC will expire at the end of 2016.