When construction starts for #solar projects under tax law, developers can invest confidently in new solar projects. While the original Solar Investment Tax Credit (ITC) was signed into law in December of 2015, actions have advanced recently. The action entitled 2018-59 offers two additional methods of solar facility support for construction that qualify for the solar ITC:
- The physical work of a solar construction project will begin with financial confidence
- The project meets the ‘five percent safe harbor test’ (there is paid or incurred at least five percent of the total cost of the project in the year that construction begins)1
The Solar #Energy Industries Association (SEIA) CEO, Abigail Ross Hopper, responded to “commence construction” guidance put in place by the IRS. It is considered that the IRS has taken important steps forward in this movement in order to help progress with solar development and construction. With this guidance there is more comfort and confidence for investors to take risk in the advanced solar projects that are set to modernize and secure updated energy infrastructure in the United States.
Solar ITC also has an important factor to know about the solar ITC as it moves into the future, as expressed by the SEIA in their recent news: “The extension of the Solar ITC will lead to sustained growth in the U.S. solar industry. By 2020, the industry will deploy more than 20 gigawatts (GW) of solar electric capacity annually and employ more than 420,000 workers. The additional solar generation will more than offset carbon emissions from the lift of the oil export ban on an annual basis by 2019.”
While worries about the reduction of solar tax credit have been of concern, some valuable factors include how a decent some tax credit will remain. The bill extends beyond the existing 30% Solar ITCs for residential and commercial projects running through the end of 2019, but the ITC then drops to 26% in 2020, and 22% in 2021. The solar ITC will then drop permanently to 10% for commercial projects and 0% for residential projects as of 2022. The bill also includes language project construction that begins before the end of 2021, allowing them to claim the larger credit once their project is placed in service, as long as that project is placed in service before the end of 2023.
Current expectation grows that IRS guidance will help maintain momentum for new projects and improvement of the economy along with energy efficiency. The SEIA was able to play a strong role in ITC legislation and moving the guidance forward. With congressional backing from both parties the SEIA has been able to bring this legislation to the table and get it passed in a timely manner.
Additionally, the SEIA has made advancements along with their work in the community for environmental improvement and quality of energy for our entire society. Even more so are improvements both financially and politically, that have occurred for decades with the production of the SEIA. Now 44 years old, SEIA® is the national trade association of the solar energy industry in our country, which employs over a quarter million Americans. SEIA provides advocacy and education for its 1,000-member companies to help strengthen solar industry power here in America. They work to make the industry cost-competitive and beneficial overall.