The extension of the Investment Tax Credit (ITC) confirmed late last year was warmly welcomed by the majority of the U.S. solar industry, and this week the Department of Energys National Renewable Energy Laboratory (NREL) published analysis forecasting just how much of a fillip the extension will offer to U.S. solar.
According to the NREL report, Impacts of Federal Tax Credit Extensions on Renewable Deployment and Power Sector Emissions, the five-year extension of the ITC with a phased ramp down towards the tail-end of this timeframe will be worth an additional 20 GW of installed PV capacity by 2022.
Combined with the Wind Production Tax Credit (PTC), which was also extended, the U.S.s tax credit landscape will drive a net peak increase of between 48 53 GW of installed renewable generation capacity in the early 2020s.
The report posited two possible impacts of the credit extensions, both related to the price of natural gas which has been a key influence on the economic competitiveness of renewable energy adoption in the U.S. In both natural gas price cases (base gas and low gas), the research found, tax credit extensions will spur renewable Capex investments into the multi-GW range, lowering C02 emissions dramatically in the process anywhere between 540 to 1,400 million metric tons.
Beyond the early 2020s, the efficacy of the ITC and PTC extensions becomes harder to predict, but NRELs analysis suggests that continued cost reductions in installation and technology especially in solar will, allied to existing clean energy policies, drive further capacity expansion for clean energy.
A study by GTM Research and Solar Energy Industries Association (SEIA) published yesterday found that the U.S. installed 7.3 GW of new solar PV capacity in 2015, growing 17% year-over-year. Despite some states seeking to curtail solars growth particularly in the residential segment the ITC extension is already expected to deliver a boost to installation figures this year, the report found.