SOLAR TODAY Blog


>>Bailout bill passes House, 263-171
October 3, 2008, 5:30 pm
Filed under: Policy

AP report: Pres. George Bush signed the Emergency Economic Stabilization Act at about 3 p.m. Eastern time.

Press release from the Solar Energy Industries Association:

WASHINGTON – Today, by a vote of 263 to 171, the U.S. House of Representatives passed historic legislation that extends the 30-percent federal investment tax credit for both residential and commercial solar installations for 8 years. This landmark legislation is part of H.R. 1424, the Emergency Economic Stabilization Act of 2008, designed to address the U.S. financial crisis. It is the most significant federal policy ever enacted for the solar industry. President Bush has vowed to sign the bill into law. The Senate passed the bill on Wednesday night.

“This bill is a major step in our long journey toward energy independence and ensures that solar energy will be a significant part of America’s energy future,” said SEIA president Rhone Resch. “This long-term extension of the solar tax credits will create a domestic solar industry with hundreds of thousands of jobs while providing clean, affordable, carbon-free energy to millions of American families, businesses, and communities.”

“On behalf of the 60,000 Americans employed by the solar energy industry, we would like to thank Leaders Reid and McConnell and Senators Baucus, Grassley, Cantwell and Ensign for their dogged support of the solar tax credit extension. In the House we are thankful to Leaders Pelosi, Hoyer, Boehner, and Blunt, and Chairman Rangel, Ranking Republican McCrery and Rep. Camp among many others who have long worked to bring solar energy to the mainstream. These leaders have broken through partisan politics and have provided a bright future for solar energy in the United States,” said Resch.

“By passing this bill, Congress has finally given the solar energy industry ‘policy certainty’ that will attract investment, expand manufacturing and lower the cost of solar energy to consumers,” said Roger Efird, SEIA chairman and president of Suntech America, a leading Chinese solar power manufacturing company. “This will allow companies like mine to move forward with expansion plans to serve the growing U.S. market.”

“This bill puts the sun to work for every American,” added Resch. “And by 2016, we expect solar energy to be the least expensive source of electricity for consumers.”

The solar investment tax credit (ITC) provisions will:

· Extend for 8 years the 30-percent tax credit for both residential and commercial solar installations;

· Eliminate the $2,000 monetary cap for residential solar electric installations, creating a true 30-percent tax credit (effective for property placed in service after December 31, 2008);

· Eliminate the prohibition on utilities from benefiting from the credit;

· Allow Alternative Minimum Tax (AMT) filers, both businesses and individuals, to take the credit;

· Authorize $800 million for clean energy bonds for renewable energy generating facilities, including solar.

The solar tax credits were originally enacted in the 2005 and have created unprecedented growth in the U.S. The amount of solar electric capacity installed in 2007 was double that installed in 2006.

“Over the last 2 years, these tax credits have turned the solar industry from a small, cottage industry into an economic engine for America. Electricians, plumbers, roofers and construction workers can now get back to work. These jobs are the backbone of the American economy and the solar industry is creating them at a time when they are needed the most,” said Resch.

According to a new economic study by Navigant Consulting, Inc., the 8-year extension of the ITC will create 440,000 permanent jobs and unleash $325 billion in private investment in the solar industry. This study did not factor in elimination of $2,000 monetary cap on the residential credit, so the actual job creation and investment could be even greater.

“This is a big boost for the residential market in particular, allowing homeowners to contribute to our nation’s energy independence,” said Efird. “It also opens the floodgates for building large, utility-scale solar power projects that need longer timeframes to complete.”

To date, there are 27 such utility-scale solar power projects totaling 5,400 megawatts of power in various stages of development; most were on hold due to uncertainty surrounding the expiring tax credits.

Because solar energy components are manufactured near their markets, this extension will create manufacturing and installation jobs in all 50 states. The states that will enjoy the largest economic boost are California, Florida, Arizona, New Mexico, Nevada, New Jersey, Massachusetts, New York, Oregon, and Washington.

Similarly, the economies of Pennsylvania, Michigan, Ohio and the rest of the Great Lakes region will grow significantly as a result of the extension. This area of the country has suffered greatly from a huge decline in jobs in the automotive and traditional manufacturing industries.

According to the same study, more than 28 gigawatts of electricity will be produced from solar energy by 2016 – enough to power more than 7 million homes.

“Success has not come easy. It required a strategic campaign that included dedicated SEIA staff, a committed board, and active membership all focused on one goal. It took seven votes in the House and 10 votes in the Senate, but in the end, Congress came through. This effort has established SEIA as a major energy player on Capitol Hill,” said Resch. “We have a lot of opportunity in front of us and will be back next year to work on critical issues such as transmission infrastructure, renewable electricity standards, and combating global warming.”

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11 Comments so far
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Now that there is no $2000 cap on residential tax credits, does that mean that residential customers should wait until 2009 to start a project, sign a contract or interconnect?

Comment by Sean White

Good question. Ask a tax attorney, and let us know. I’ll find out on Monday.

For most customers, it’s academic: If you haven’t started the project yet, there’s little chance you could get on an installer’s schedule in time to turn the switch before New Year’s Day. Meanwhile it will be interesting to watch the schedules relax on projects that were rushing to complete by Dec. 31.

Seth

Comment by Seth Masia

Does the 30% with no cap apply to solar thermal installations as well? From the language in the bill it seems that it goes into effect immediately.

Comment by craig buttke

Will ASES be publishing an updated tax
guide concerning this new law? I’ve done a little looking but so far I can’s say for sure what it all means.

Comment by Greg Egan

We have customers calling us and wondering if they should wait until January to connect their systems or even pay us.

I can’t find the answer anywhere, but think that it would be resonable to give people an incentive to hook up to the grid asap.

Sean

Comment by Sean White

ASES doesn’t give tax advice, so I can’t comment on the advisability of delaying a hook-up. However, the folks at SEIA say the $2000 cap will still apply to solar water-heating systems, so there’s no reason to delay finishing those projects.

Comment by Seth Masia

[[Page 119 STAT. 1034]]
“(2) Qualified photovoltaic property expenditure.–The term `qualified photovoltaic property expenditure’ means an expenditure for property which uses solar energy to generate electricity for use in a dwelling unit located in the United States and used as a residence by the taxpayer.”

By this text from the bill, it seems that grid-tied programs like Washington (state) and Alaska’s SNAP (Sustainable Natural Alternative Power) programs are ineligible for this since the power goes straight to the grid before being used in the home. It seems that only utilities with net metering will be useful for people claiming grid-tied systems for the tax credit.

Any comments here?

Comment by Bruno Grunau

Great question, Bruno. Once again I’d have to defer to a tax attorney. Don’t the SNAP systems qualify for ITC/PTC in the commercial category?

Totally amateur observation: If you delay commissioning a system until after Dec. 31, you’ll claim the credit on your 2009 tax return. If you commission before that, you may only qualify for a $2000 credit, but you’ll claim it a year earlier. You need to balance the time value of the credit.

Comment by Seth Masia

There must be a fine line where you can get the tax credit without the cap.

It is going to be a $4000 difference on the smallest system, so it is definitely worth waiting for.

Perhaps we can have the customer interconnect officially in Jan?

Comment by Sean White

Someone told me the other day that “commissioning date” or “in-service date” depends somewhat on local codes and the tie-in requirements of the utility company. In some areas you have to schedule and perform a lot of tests before you’re eligible for local rebates. A tax lawyer might say that you should apply for the credit based on the date you get final-final approval from your utility company and all permitting authorities. That could easily push it back to January. Meanwhile, the installer or electrical contractor certainly ought to be paid for work done, and not have to wait for the tax credit to ring up.

Comment by Seth Masia

Seth..very interesting point. I will have to ask my Father who is the tax expert in these utility areas. I am jazzed to see this bill pass as it means in the place I live here in the Southwest that the ROI could be recouped somewhere between 3.5-4 years total. I am still giddy and will apply to for my rebate now as the money is limited and am sure when the dust settles will get eaten up fast..

Also I feel fortunate, although I have not had a chance to read the final bill, that we do in fact have net metering where I live. Whoo Hoo!! ;o)

Can’t wait to watch my dial spinning backwards. That said I noticed that my Utility now will not allow any or the incentive hour based usage plans when you go this route. The upside is locking down free power for 20+ years minus some maintenance. At $2200 hundred a year expense now (and rising) and $22,000 for a solar power generation set-up with incentives should be around $6500 hundred outlay total. That includes the fact that we have no sale tax here on these systems.

Almost did it this year and now seems very lucky I waited. That lifted ‘cap’ makes a huge difference on the whole thing.

We must all work harder to address areas in the country that can further benefit from State and Federal incentives in the area of renewable power solar/wind generation.

Jeff Dahlgren
http://www.motherearthenergy.com

Comment by Jeff Dahlgren




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