Only a few weeks ago, an extension of the U.S. Investment Tax Credit (ITC) seemed unlikely, and solar businesses globally were basing their strategies on the credit stepping down to 10% on January 1, 2017 and expiring entirely for individuals.
However, a three-year-plus extension of the ITC was included this week in a bill to fund the federal government, and this morning passed both the U.S. House and U.S. Senate. The Senate vote had to be taken twice due to procedural motions, and the final vote was 65-33.
The bill now goes to the desk of U.S. President Barack Obama, who supports it.
Under the extension, the ITC will stay at 30% through 2019, and then decline gradually for two years before falling to 10%. The legislation also allows for PV projects to claim the credit for the year in which they begin construction.
The bill was opposed by some members of the Democratic Party, for reasons including lifting a 40-year ban on oil exports, as well as some Republicans who objected to spending levels.
Studies by GTM Research, IHS and Bloomberg New Energy Finance all show that ITC extension will greatly increase the amount of solar installed in the United States to 2020, with GTM Research predicting that 25 GW of additional PV will be put online. According to IHS, this will prevent the first annual decline in the global solar industry in over a decade.
Conergy Regional Head of Americas Yann Brandt was a proponent of ITC extension well before it was considered a realistic goal by many in the industry. "The ITC extension levels the playing field, so solar can compete in a fair and open market," said Brandt upon the bill’s passage.
"We are thrilled about the bill passing for the growth of our entire U.S. business and, particularly, for us to do more work now in the Americas. More than anything the long term extension gives businesses the regulatory certainty to invest in their operations and hire new employees."