Should the U.S. Investment Tax Credit (ITC) be extended out to 2022 at the current 30% rate it will support the installation of an additional 22 GW of solar PV capacity, finds a report published today by Bloomberg New Energy Finance (BNEF).
The independent analysis was conducted by BNEF at the behest of the U.S. Solar Energy Industries Association (SEIA) and posits a future scenario whereby the ITC runs for a further five years. Under such an extension, solar across the U.S. would grow by around 69 GW some 22 GW more than the 47 GW projected should the current ITC expire, as it is currently poised to do, at the end of 2016.
By January 1, 2017, the ITC will have dropped from 30% to 10% for commercial-scale systems, and will end altogether for the residential sector. Should no extension be forthcoming and the SEIA and others in the industry are pulling hard for that not to happen then industry activity is expected to drop sharply in 2017, but not before a scrambled rush towards the end of 2016.
According to BNEFs forecast, 2017 will experience a year-over-year drop in installations of around 8 GW, plumbing installation depths not seen since 2012 before rising steadily again the following year.
In contrast, a five-year extension of the ITC for both commercial and residential and enacted by mid-2016 so as to avoid an end-of-year rush would serve to maintain the current pace of solar growth. The extension would cut across all segments, says the SEIA, with utility-scale solar growing by 31 GW between 2016-2022, sun 10 GW more than the no-ITC scenario. For commercial, growth would be 5 GW greater, and residential would benefit by a further 7 GW.
Cumulatively, a 30% ITC out to 2022 would see the U.S. hit 95 GW of installed solar PV capacity, generating some 144,000 TWh of electricity enough to power 19 million homes and account for 3.5% of the countrys energy mix.
The dreaded ITC "cliff", currently unavoidable in 2017, would also be less steep after 2022, says the BNEF report, with deployment only set to fall by 10% as opposed to a projected 71% in 2017.
From an employment and economic perspective, the SEIA suggests that 80,000 solar jobs could be lost by 2017 if the ITC is not extended, and 100,000 overall, whereas an extension would not only protect those jobs but also add 61,000 roles in the industry, delivering 32% greater employment over that five-year period, which would help yield up to $124 billion in total investment as opposed to just $39 billion if the ITC expires.
"The good-paying jobs of more than 100,000 Americans and thousands of U.S. companies many of them small businesses are at risk if the ITC is not extended," said SEIA President and CEO Rhone Resch. "As the voice of the solar industry, SEIA will not rest until Congress fully understands the importance of this critical policy. The time to act is now."