Solar Investment Tax Credit

    Obama Fights to Extend the ITC

    With the Solar Investment Tax Credit (ITC), solar PV has experienced remarkable growth in the US.

    Residential and commercial solar benefited from a significant boost with the introduction of a 30% investment tax credit (ITC) under the 2005 Energy Policy Act. Although initially offered for a brief year-long period (2006-2007), subsequent extensions pushed the expiration of the ITC through 2016. Under the ITC the individual or company claiming ownership of the system receives a reduction in their income taxes equal to the amount invested in the installed solar photovoltaic system. 

    In conjunction with healthy private investment, under the ITC solar PV has experienced remarkable growth in the US. Since the initial introduction of the program in 2006 the industry has seen a compounded annual growth rate of 76%. Today the US is home to nearly 600,000 individual solar installations, representing 1,750 MW of capacity. In 2006, the US installed only several hundred MW of PV. By comparison, last year over 6,000 MW of nameplate capacity was installed.


    PV Installation Forecast

    Although this significant growth cannot be attributed solely to one mechanism, the ITC has played an important role in improving the bottom line of PV systems and encouraging industry growth. The current administration has indicated that it wishes to reaffirm this growth by including a permanent extension of the ITC in the 2016 Federal budget. The extension would be part of a larger appropriation devoted to clean energy technologies via the departments of Energy and Defense including a fund dedicated to aiding states in regulating carbon emissions from power plants. However unlikely it is that the current iteration of the budget will pass Congress intact, an extension of the ITC represents a clear vote of confidence in the solar industry.


    5 years 9 months ago
    Written by
    Conor Walsh
    Support topic
    Finance and Regulation
    Support keywords
    Investment Tax Credit
    30% Credit
    Energy Policy Act