A new report from Bloomberg New Energy Finance (BNEF) predicts substantially more solar-generating capacity will be built in the United States and a major industry downturn will be avoided if the federal solar investment tax credit (ITC) is extended at its current level.
The ITC is set to drop from 30 percent to 10 percent for commercial systems and zero for residential systems at the end of 2016. According to the BNEF analysis, this will produce a sharp drop in industry activity in 2017. Developers will scramble to complete projects with contracts based on the current credit before the end of next year. That pipeline depletion and weaker economics will result in a drop of roughly 8 gigawatts (GW) in annual installations through 2017. Such a dramatic drop would bring new solar installation activity to its lowest annual level since 2012.
BNEF also explored the impact of a five-year extension of both the residential and commercial credits at 30 percent, with the addition of a commence-construction clause. Enacting such an extension by mid-2016 would help to prevent the highly disruptive 2017 cliff currently set in law.
“With a proposed five-year federal ITC extension, we anticipate an additional 22 GW of solar will get built by 2022,” Bloomberg analyst Madeline Yozwiak said. "Without it, we still anticipate solar growth in the next decade, but it will be a much rockier ride."
In a separate analysis, pairing the BNEF forecast with the Jobs and Economic Development Impacts model developed by National Renewable Energy Laboratory, the Solar Energy Industries Association (SEIA) found the United States would lose more than 80,000 solar jobs during 2017 alone without an ITC extension. Factoring in the fallout from related industries that stand to be impacted, the analysis shows a loss of more than 100,000 American jobs from failure to extend the ITC.
“The good-paying jobs of more than 100,000 Americans and thousands of U.S. companies—many of them small businesses—are at risk if the ITC is not extended,” SEIA President and Chief Executive Officer Rhone Resch said.
To read more of the findings from both analyses, go to http://www.seia.org/research-resources/solar-itc-impact-analysis.