Boom Puts Spotlight on Renewing Key Solar Tax Break
Solar energy is booming in the United States and the industry wants everyone to know it. But winning an extension of a key solar tax break in a GOP Congress suspicious of green energy won’t be easy, especially as regulatory and market forces continue to batter fossil fuels and nuclear power.
The industry’s lobbying arm, the Solar Energy Industries Association, is working overtime to keep the incentive — the investment tax credit, or ITC — on the books past 2016, when its current treatment ends.
“This industry is clicking and all we need right now are stable consistent policies to remain in effect for the foreseeable future,” SEIA spokesman Ken Johnson said.
Renewables continue to pick up market share, with solar leading the way.
Falling equipment prices and the continued popularity of rooftop solar are predicted to push a record-high 9 gigawatts of new solar capacity online in 2015, according to a recent analysis by Bloomberg New Energy Finance. That’s enough to power more than 6 million homes.
The rapid growth has also been a boon for overall U.S. job numbers, as President Barack Obama noted this month.
“The solar industry is actually adding jobs 10 times faster than the rest of the economy,” Obama said during a solar-themed event at a Utah military base on April 3.
But the good times stem in no small part from the ITC, which has been solar’s primary federal incentive for a decade. First enacted in 2005, the credit allows businesses and home owners to write off 30 percent of the costs of installing solar.
Unless Congress acts, at the end of 2016 the credit drops to 10 percent for commercial projects and will disappear entirely for residential properties.
The SEIA’s top priority is winning an extension, although Johnson says the group hasn’t made any decisions on what it wants that extension to look like or how long it would last.
The path to an extension lies through the treacherous waters surrounding the tax code. Republican support for renewable tax breaks continues to slip, driven by a backlash over the Obama administration’s climate agenda.
Further complicating matters is a coordinated campaign by conservative groups to pressure lawmakers to oppose more clean energy tax breaks.
Led by the American Energy Alliance, which has financial ties to the Koch brothers, the coalition helped thwart the wind industry’s effort to secure a long-term extension of its main tax break, the now-expired production tax credit.
The AEA has been less active on the solar credit, but wants to see it off the books as well.
“It’s on our radar,” said spokesman Chris Warren, adding that internal strategy discussions are underway.
The SEIA is working to pre-empt the counterattack. Over the past week, it’s been rolling out daily releases highlighting solar’s growing economic presence in states such as Missouri, Indiana and Connecticut.
And following GOP electoral gains, the group’s political action committee is focusing more attention on Republicans. According to OpenSecrets.org, SolarPAC favored Democrats to Republicans 65 percent to 35 percent in 2014.
The arguments for both credits are largely the same, including the need for policy certainty for investors, as well as the permanent tax breaks that the oil and gas industries have received for nearly a century.
Solar holds some advantages over the wind sector, including the relative newness of the ITC compared with the production tax credit created in 1992. The fact that solar got a long-term ITC extension in 2008 has also meant backers haven’t had to repeatedly ask Congress for more time.
Johnson, a former GOP aide on the House Energy and Commerce and Homeland Security committees, said the SEIA’s current focus is on educating members and staff that the benefits of solar extend far beyond the budgetary costs of an ITC extension.
But that task is complicated by the ongoing conservative campaign to undo state renewable energy mandates and subsidies, while imposing new fees on the rooftop solar systems in homes. Congress has been quiet about those fights, but the pushback against solar is only expected to increase in the coming months.
“It’s gonna be a battle,” Johnson said. “It’s gonna be a slugfest from here on out.”