SPI 15 - New Bloomberg New Energy Finance Report Forecasts Strong, Steady Solar Growth -- with the Investment Tax Credit (ITC) Extended
Developers will scramble to complete projects with contracts based on the current credit before the end of next year.
ANAHEIM, CALIF. and WASHINGTON, D.C. - A new report from Bloomberg New Energy Finance (BNEF) predicts substantially more solar generating capacity will get built in the United States, and a major industry downturn will be avoided, if the federal solar investment tax credit (ITC) is extended at its current level.
The ITC is set to drop from 30 percent to 10 percent for commercial systems and zero for residential systems at the end of 2016. According to the BNEF analysis, this will produce a sharp drop in industry activity in 2017. Developers will scramble to complete projects with contracts based on the current credit before the end of next year. That pipeline depletion, and weaker economics, will result in a drop of roughly 8 gigawatts (GW) in annual installations through 2017. Such a dramatic drop would bring new solar installation activity to its lowest annual level since 2012.
BNEF also explored the impact of a 5-year extension of both the residential and commercial credits at 30 percent, with the addition of a commence-construction clause. Enacting such an extension by mid-2016 helps prevent the highly-disruptive 2017 cliff currently set in law.
"With a proposed five-year federal ITC extension, we anticipate an additional 22 GW of solar will get built by 2022," Bloomberg analyst Madeline Yozwiak said. "Without it, we still anticipate solar growth in the next decade, but it will be a much rockier ride."
In a separate analysis, pairing the BNEF forecast with the Jobs and Economic Development Impacts model (JEDI) developed by National Renewable Energy Laboratory (NREL), the Solar Energy Industries Association (SEIA) found the U.S. would lose more than 80,000 solar jobs during 2017 alone without an ITC extension. Factoring in the fallout from related industries that stand to be impacted, the analysis shows a loss of more than 100,000 American jobs from failure to extend the ITC.
"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."
The ITC is a 30 percent federal tax credit for solar systems on residential (Section 25D) and commercial (Section 48) properties that, under current law, remains in effect through Dec. 31, 2016. After that, unless Congress takes action, the commercial credit will drop to 10 percent and the residential credit will expire fully.
To read more of the findings from both analyses go to http://www.seia.org/research-resources/solar-itc-impact-analysis.