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Renewable Energy Investment Tax Credit Extension a Huge Lottery Win for solar players

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RE Investment Tax Credit Extension

At the ground level, those adopting solar energy are enjoying a wealth of credits and deductions on their tax refunds. However, they’re not the only ones reaping the benefits of alternative energy. The extension of the investment tax credit of 30% from 2016 end to 2019 end, was a huge unexpected lottery win for all major renewable energy players. Though this bill which is part of the $1 trillion federal spending law will still need to be passed by the Senate, the probability of losing is very low. The reason is that it is a part of a large spending bill and not standalone for extending the 30% ITC. Most of the solar industry was not counting for an extension and was working on the premise that it would end in 2016, leading to a huge surge in 2016 followed by a lull in 2017. The stocks jumped by 20-30% after the ITC extension was made a part of the bill. The biggest gainers were the US solar residential installers such as SolarCity, Vivint and Sunedison which depend heavily on the ITC for gaining business. Note most of the USA solar installations are restricted to a few states like California and Arizona. Grid parity is still in the process of getting attained in places such as Ohio, Florida and others. The US ITC is the only substantial federal support measure given to the solar industry now.

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We think it is a great move and will help the world meet its climate change commitment as well. It will be difficult to derail the solar extension as a large part of the political spectrum is behind solar industry now. Both parties are supporting solar energy, with Hilary Clinton coming with a pledge for 500 million solar panels to be installed in USA. The ITC extension should lead to a temporary reduction in the expected 2016 USA installs, but will be more than made up in the next 5 years. Note the ITC extension till 2019 means that the US solar industry will reach grid parity in most states much earlier than expected. By 2019, the solar industry should be competitive enough so that no more subsidies will be needed.

A five-year extension to the solar investment tax credit (ITC), which is currently included in the omnibus spending bill under consideration in Congress, would result in 25 gigawatts (GW) of additional solar capacity over the next five years — a 54 percent increase over a no-extension scenario. According to GTM Research, which just released a preliminary updated state- and segment-level forecasts based on the current omnibus language, ITC extension will foster $40 billion in incremental investment in solar between 2016 and 2020.

Source – GTM

PG

Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to greensneha@yahoo.in

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